2015 BILANCIO CONSOLIDATO E BILANCIO DI ESERCIZIO 2015 … · 2016. 4. 26. · 2015 bilancio...

2015 BILANCIO CONSOLIDATO E BILANCIO DI ESERCIZIO

2015 CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS

SOCIETA’ PER AZIONI - CAPITALE SOCIALE EURO 61.672.548,60 REGISTRO DELLE IMPRESE DI MANTOVA E CODICE FISCALE N. 00607460201

SOCIETA' SOGGETTA ALL'ATTIVITA' DI DIREZIONE E COORDINAMENTO DI CIR S.p.A. SEDE LEGALE: 46100 MANTOVA, VIA ULISSE BARBIERI, 2 - TEL. 0376. 2031

UFFICI: GUYANCOURT (FRANCIA), PARC ARIANE IV- 7 AVENUE DU 8 MAI 1945-TEL. 0033 01 61374300

UFFICI: 20149 MILANO, VIA FLAVIO GIOIA, 8 - TEL. 02.467501 SITO INTERNET: WWW.SOGEFIGROUP.COM

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INDICE / CONTENTS

ORGANI SOCIALI /CORPORATE BODIES 5AVVISO DI CONVOCAZIONE DELL’ASSEMBLEA 6SINTESI DEI RISULTATI DEL GRUPPO 10ANDAMENTO DEL TITOLO 10RELAZIONE DEGLI AMMINISTRATORISULL’ANDAMENTO DELLA GESTIONE NELL'ESERCIZIO 2015 11STRUTTURA DEL GRUPPO SOGEFI 35BILANCIO CONSOLIDATO AL 31 DICEMBRE 2015- Prospetti contabili consolidati 36- Note esplicative ed integrative 42- Elenco delle partecipazioni 167ATTESTAZIONE DEL BILANCIO CONSOLIDATO AI SENSIDELL’ARTICOLO 81-TER DEL REGOLAMENTO CONSOB N. 11971/99 E SUCCESSIVE MODIFICHE 172RELAZIONE DEL COLLEGIO SINDACALE 173RELAZIONE DELLA SOCIETA’ DI REVISIONE 180OVERVIEW OF GROUP RESULTS 184STOCK PERFORMANCE 184REPORT OF THE BOARD OF DIRECTORS ON OPERATIONS IN 2015 185SOGEFI GROUP STRUCTURE 209CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015- Consolidated financial statements 210- Explanatory and supplementary notes 216- List of equity investments 336CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT ARTICLE 81-TER OF CONSOB REGULATION NO. 11971/99 AND SUBSEQUENT AMENDMENTS 341REPORT OF THE BOARD OF STATUTORY AUDITORS 342REPORT OF THE INDEPENDENT AUDITORS 347SOGEFI S.p.A. – BILANCIO D’ESERCIZIO AL 31 DICEMBRE 2015- Prospetti contabili 349- Note esplicative ed integrative 357- Allegati 441ATTESTAZIONE DEL BILANCIO D’ESERCIZIO AI SENSI DELL’ARTICOLO 81-TER DEL REGOLAMENTO CONSOB N. 11971/99 E SUCCESSIVE MODIFICHE 451RELAZIONE DELLA SOCIETA’ DI REVISIONE 452BILANCI D’ESERCIZIO DELLE SOCIETA’ CONTROLLATE DIRETTE

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CONSIGLIO DI AMMINISTRAZIONE BOARD OF DIRECTORS

Presidente Onorario / Honorary Chairman

CARLO DE BENEDETTI

Presidente / Chairman MONICA MONDARDINI (1)

Amministratore Delegato e Direttore Generale / Managing Director and General Manager

LAURENT HEBENSTREIT (1)

Consiglieri / Directors EMANUELE BOSIO

LORENZO CAPRIO (3) RODOLFO DE BENEDETTI ROBERTA DI VIETO (3)(4)

DARIO FRIGERIO (2) GIOVANNI GERMANO (2)

ROBERTO ROBOTTI (3) PAOLO RICCARDO ROCCA (2)(4)(5)

Segretario del Consiglio / Secretary to the Board

NIVES RODOLFI

COLLEGIO SINDACALE

BOARD OF STATUTORY AUDITORS

Presidente / Chairman RICCARDO ZINGALES

Sindaci Effettivi /Acting Auditors

GIUSEPPE LEONI CLAUDIA STEFANONI

Sindaci Supplenti / Alternate Auditors

ANNA MARIA ALLIEVI MAURO GIRELLI

LUIGI MACCHIORLATTI VIGNAT

SOCIETÀ DI REVISIONE INDEPENDENT AUDITORS

DELOITTE & TOUCHE S.p.A.

Segnalazione ai sensi della raccomandazione Consob n. 97001574 del 20 febbraio 1997: (1) Poteri come da Corporate Governance.

(2) Membri del Comitato Nomine e Remunerazione. (3) Membri del Comitato Controllo e Rischi e del Comitato per le Operazioni con Parti Correlate.

(4) Membri dell’Organismo di Vigilanza (D.Lgs. 231/2001). (5) Lead independent director.

Details on the exercise of powers (Consob Resolution no. 97001574 of February 20, 1997):

(1) Powers as per Corporate Governance. (2) Members of the Appointments and Remuneration Committee.

(3) Members of the Control and Risks Committee and of the Related Party Transactions Committee. (4) Members of the Supervisory Body (Legislative Decree 231/2001).

(5) Lead independent director.

184 Sogefi | Preliminary Notes

OVERVIEW OF GROUP RESULTS

(in millions of Euro)

Amount % Amount % Amount % Amount %

Sales revenues 1,319.2 100.0% 1,335.0 100.0% 1,349.4 100.0% 1,499.1 100.0%

EBITDA pre-non recurring expenses 131.2 9.9% 145.7 10.9% 134.6 10.0% 136.9 9.1%

EBITDA 126.7 9.6% 129.5 9.7% 109.5 8.1% 115.5 7.7%

Ebit pre-non recurring expenses 71.1 5.4% 86.7 6.5% 74.7 5.5% 72.2 4.8%

Ebit 63.4 4.8% 69.1 5.2% 48.3 3.6% 50.7 3.4%

44.9 3.3% 40.4 3.1% 21.5 1.6% 17.9 1.2%

Net result 28.2 2.1% 21.1 1.6% 3.6 0.3% 1.1 0.1%

Self-financing 89.2 87.9 67.6 53.4

Free cash flow 27.6 10.0 3.8 (24.8)

Net financial position (295.8) (304.6) (304.3) (322.3)

200.3 188.9 180.8 190.4

GEARING 1.48 1.61 1.68 1.69

ROI 12.7% 14.0% 9.9% 10.2%

ROE 15.5% 12.1% 2.2% 0.7%

Number of employees at December 31 6,735 6,834 6,668 6,702

Dividends per share (Euro) 0.13 - - - (*)

EPS (Euro) 0.260 0.187 0.032 0.010

Average annual price per share 1.9856 2.8377 3.5350 2.5133

(*) As proposed by the Board of Directors to the Shareholders' Meeting

2012 2013 2014 2015

Result before taxes and

non-controlling interests

Total shareholders' equity

STOCK PERFORMANCE

The graph below shows the performance of Sogefi stock and of the ITSTAR index

in 2015.

Sogefi stock price

ITSTAR Index

2.1100 € Sogefi

18,873 ITSTAR

2.1660 € Sogefi

26,091 ITSTAR

Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15

-20%

0%

20%

40%

60%

80%

100%

Sogefi | Report on Operations 185

REPORT OF THE BOARD OF DIRECTORS ON OPERATIONS IN 2015

Shareholders,

in 2015 the Sogefi Group recorded revenues for Euro 1.5 billion, up by 11.1% (+9.1% exchange rates being equal) thanks to the positive contribution of all business units and all geographical areas, with the exception of Latin America.

With regard to the overall performance of the automotive markets in 2015, the production of cars and light commercial vehicles rose 1.4%, benefiting from the robust recovery of the European market (+7.1%) and from the expansion in North America (+2.7%). In 2015, production volumes experienced a 4.5% growth in Asia, where a sound fourth quarter performance (+9.9%) recovered the decline recorded in the third quarter. The recessionary phase continued in South America with production down by 20.5% during the year, with an acceleration of the negative trend by 29.2% in the fourth quarter.

In 2015, all business units achieved significant revenue growth compared to the previous year. Suspensions sales increased by 10.1% (+9.2 % exchange rates being equal), benefiting from the positive momentum of the passenger car business in Europe and an increased market share in South America.The sales of the Filtration business unit increased by 13.2% (+10% exchange rates being equal) during 2015, driven by growth in North America and by the original equipment business in Europe. The sales of the Air&Cooling business unit grew by 9.3% over 2014 (+7.5% exchange rates being equal), boosted by the increased market share in North America.

The table below shows the performance of the divisions:

(in millions of Euro)Amount % Amount %

Suspensions 558.0 37.2 506.6 37.5Filtration 536.4 35.8 473.7 35.2Air&Cooling 409.3 27.3 374.3 27.7Intercompany eliminations (4.6) (0.3) (5.2) (0.4)TOTAL 1,499.1 100.0 1,349.4 100.0

2015 2014

The weight of non-European countries on total revenues rose to 37% in 2015 (35.4% in 2014), up 1.6 percentage points thanks to the good performance in North America and Asia, which more than compensated for the sluggish performance of South American markets.

Market recovery in Europe – Sogefi's largest market – propelled revenues by 8.2% in 2015, thanks to the positive performance of all business areas. Sogefi recorded a performance better than the market in North America thanks to its positioning towards local auto makers. In South America, revenues for the year dropped by 3.8% (+2.8% exchange rates being equal) in spite of a 20.5% downturn in the market, thanks to the positive contribution of

186 Sogefi | Report on Operations

the Suspensions business. In 2015, revenues in Asia increased by 34.4% (18.7% exchange rates being equal).

The table below shows a breakdown of sales by key markets.


Europe 943.8 63.0 872.1 64.6Mercosur 174.5 11.6 181.4 13.5NAFTA 264.1 17.6 207.3 15.4Asia 111.1 7.4 82.7 6.1Rest of the world 5.6 0.4 5.9 0.4TOTAL 1,499.1 100.0 1,349.4 100.0

2015 2014

Sogefi's key customers are Ford, FCA, Renault/Nissan, PSA, Daimler and GM, all of which yielded growing revenues in 2015.

(in millions of Euro)Group Amount % Amount %Ford 200.3 13.4 169.0 12.5FCA/CNH Industrial 179.6 12.0 143.5 10.6Renault/Nissan 175.3 11.7 165.7 12.3PSA 166.4 11.1 154.4 11.4Daimler 116.5 7.8 100.0 7.4GM 116.2 7.8 111.9 8.3Volkswagen/Audi 51.8 3.5 47.4 3.5BMW 42.9 2.9 38.6 2.9Toyota 33.3 2.2 28.6 2.1Other (including the Aftermarket) 416.8 27.6 390.3 29.0TOTAL 1,499.1 100.0 1,349.4 100.0

2015 2014


The following table provides comparative figures of the Income statement for 2015 and the previous year.


Sales revenues 1,499.1 100.0 1,349.4 100.0Variable cost of sales 1,079.1 72.0 960.0 71.1CONTRIBUTION MARGIN 420.0 28.0 389.4 28.9Manufacturing and R&D overheads 146.1 9.7 128.8 9.5Depreciation and amortization 64.4 4.3 58.0 4.3Distribution and sales fixed expenses 45.2 3.0 41.8 3.1Administrative and general expenses 72.3 4.8 71.0 5.3Restructuring costs 6.9 0.5 16.2 1.2Losses (gains) on disposal (1.6) (0.1) (0.1) - Exchange (gains) losses 3.6 0.2 0.6 - Other non-operating expenses (income) 32.4 2.2 24.8 1.9- of which non recurring expenses 16.1 10.3EBIT 50.7 3.4 48.3 3.6Financial expenses (income), net 32.8 2.2 26.8 2.0- of which fair value of the embedded derivative(convertible bond) (1.5) (14.0)- of which other net financial expenses (income) 34.3 40.8Losses (gains) from equity investments - - - - RESULT BEFORE TAXES AND NON-CONTROLLING INTERESTS 17.9 1.2 21.5 1.6Income taxes 12.9 0.9 13.1 1.0NET RESULT BEFORE NON-CONTROLLING INTERESTS 5.0 0.3 8.4 0.6Loss (income) attributable to non-controlling interests (3.9) (0.2) (4.8) (0.3)GROUP NET RESULT 1.1 0.1 3.6 0.3

2015 2014

2015 EBITDA rose by Euro 6 million to Euro 115.5 million (7.7% of revenues).

It is worth recalling that non-recurring expenses of € 21.5 million were recorded in 2015 of which € 11.8 million in the second quarter for the Air&Cooling provision for product warranties and € 7.3 million for restructuring costs.

Amortisation, depreciation and writedowns (included in “Other non-operating expenses (income)”) increased from Euro 59.9 million in 2014 to Euro 64.8 million in 2015. As a result, EBIT rose to Euro 50.7 million from Euro 48.3 million in 2014.

The net result was a positive € 1.1 million, down slightly from € 3.6 million in 2014 as an effect of higher financial expense, which in the previous year had benefited from positive non-recurring items.

At the end of 2015, the Sogefi Group's workforce was 6,702 (6,668 as at December 31,


2014). Breakdown by business sector is as follows:

Number % Number %Suspensions 2,663 39.7 2,582 38.7Filtration 2,750 41.2Air&Cooling 1,350 20.1 1,263 18.9Other 60 0.9 73 1.1TOTAL 6,702 100.0 6,668 100.0

12.31.2015 12.31.2014

2,629 39.3

and breakdown by category is provided below:

Number % Number %Managers 98 1.5 97 1.5Clerical staff 1,866 27.8 1,824 27.4Blue collar workers 4,738 70.7 4,747 71.1TOTAL 6,702 100.0 6,668 100.0

12.31.2015 12.31.2014

Net financial debt stood at Euro 322.3 million at December 31, 2015 compared to Euro 304.3 million at December 31, 2014. The change during the year included non-recurring items of approximately Euro 20 million which referred to product quality guarantee charges.

The following table provides a breakdown of indebtedness as of December 31, 2015:

(in millions of Euro) 12.31.2015 12.31.2014Cash, banks, financial receivables and securities held for trading 128.2 133.5Medium/long-term financial receivables 13.2 0.2Short-term financial debts (*) (92.6) (78.3)Medium/long-term financial debts (371.1) (359.7)NET FINANCIAL POSITION (322.3) (304.3)

(*) Including current portions of medium and long-term financial debts.


The table below shows changes in cash flows during the year:

(in millions of Euro) Note(*) 2015 2014SELF-FINANCING (f) 53.4 67.6Change in net working capital (4.2) 20.4Other medium/long-term assets/liabilities (g) 4.8 (2.1)CASH FLOW GENERATED BY OPERATIONS 54.0 85.9Sale of equity investments (h) - - Net decrease from sale of fixed assets (i) 1.0 3.8TOTAL SOURCES 55.0 89.7Increase in intangible assets 30.4 42.1Purchase of tangible assets 51.3 42.3TOTAL APPLICATION OF FUNDS 81.7 84.4

(l) 1.9 (1.5)FREE CASH FLOW (24.8) 3.8Holding Company increases in capital 0.1 2.5Increases in share capital of consolidated subsidiaries 0.1 - Dividends paid by the Holding Company to shareholders - - Dividends paid by subsidiaries to non-controlling interests (4.3) (2.6)Change in fair value derivative instruments 10.9 (3.4)CHANGES IN SHAREHOLDERS' EQUITY 6.8 (3.5)Change in net financial position (m) (18.0) 0.3Opening net financial position (m) (304.3) (304.6)CLOSING NET FINANCIAL POSITION (m) (322.3) (304.3)

Exchange differences on assets/liabilities and equity

(*) See the notes at the end of this report for a detailed explanation of the reasons for the reclassifications that we have made.

As of December 31, 2015, shareholders’ equity, not including non-controlling interests, was Euro 170.8 million (vs. Euro 161.2 million as of December 31, 2014), as illustrated in the table below.

(in millions of Euro) Note(*)Amount % Amount %

Short-term operating assets (a) 341.8 325.3Short-term operating liabilities (b) (341.2) (323.2)Net working capital 0.6 0.1 2.1 0.4Equity investments (c) 0.4 0.1 0.4 0.1

636.4 124.1 632.8 130.5CAPITAL INVESTED 637.4 124.3 635.3 131.0Other medium and long-term liabilities (e) (124.7) (24.3) (150.2) (31.0)NET CAPITAL INVESTED 512.7 100.0 485.1 100.0Net financial indebtedness 322.3 62.9 304.3 62.7Non-controlling interests 19.6 3.8 19.6 4.0Consolidated equity of the Group 170.8 33.3 161.2 33.3TOTAL 512.7 100.0 485.1 100.0

Intangible, tangible fixed assets and other medium and long-term assets (d)

(*) See the notes at the end of this report for a detailed explanation of the reasons for thereclassifications that we have made.

12.31.2015 12.31.2014


Outlined below are a few indicators as at 2015 year end: � gearing (net financial position/total equity ratio) stood at 1.69 at the end of

2015 (1.68 at the end of 2014); � ROI (Return on Investment, calculated as the ratio of EBIT to average net

capital invested) increased from 9.9% in 2014 to 10.2% in 2015; � ROE (Return on Equity) was 0.7% at the end of 2015 (2.2% in 2014).

INVESTMENTS AND RESEARCH & DEVELOPMENT ACTIVITIES

Investment in tangible fixed assets grew from Euro 42.3 million in 2014 to Euro 51.3 million in 2015 and were mainly aimed at enhancing production capacity, engineering of new products, improving industrial processes and increasing productivity.

Research and development expenses amounted to Euro 35.5 million, were stable compared to 2014, and mostly focused on product innovation.


RECONCILIATION BETWEEN THE HOLDING COMPANY'S STATUTORY FINANCIAL STATEMENTS AND THE CONSOLIDATED FINANCIAL STATEMENTS

The following is a reconciliation of the Group’s net result and equity at the end of the year with the equivalent figures for the Holding Company:

Net result for the year(in millions of Euro) 2015 2014Net result per Sogefi S.p.A. financial statements (6.8) 2.0Group share of results of subsidiary companies included in the consolidated financial statements 25.0 23.5Elimination of Sogefi S.p.A. dividends (17.0) (16.3)Elimination of unrealized gains deriving from intercompany transactions and other consolidation adjustments, net of the related deferred taxation (0.1) (5.6)NET RESULT PER CONSOLIDATED FINANCIAL STATEMENTS 1.1 3.6

Shareholders' equity(in millions of Euro) 12.31.2015 12.31.2014Shareholders' equity per Sogefi S.p.A. financial statements 167.5 161.3Group share of excess equity value of investments in consolidated companies over carrying value in Sogefi S.p.A. financial statements (19.2) (26.4)Elimination of unrealized gains deriving from intercompany transactions and other consolidation adjustments, net of the related deferred taxation 22.5 26.3SHAREHOLDERS' EQUITY PER CONSOLIDATED FINANCIAL STATEMENTS 170.8 161.2


PERFORMANCE OF THE HOLDING COMPANY SOGEFI S.p.A.

In the year 2015, the Company recorded a net loss of Euro 6.8 million, compared to a net profit of Euro 2 million in the previous year. The result of the year was adversely affected by higher non-operating expenses. More specifically, the Company incurred a loss of Euro 6.1 million as it waived trade receivables from subsidiaries Sogefi Filtration Argentina S.A. and Allevard Rejna Argentina S.A. on December 31 2015. This decision was dictated by a need to provide adequate financial support to these subsidiaries and by regulations issued by Argentinian monetary authorities several years ago prohibiting dividend, royalty and service payments to foreign beneficiaries that continue in force (and were still in force at the time of the waiver). It was also aimed at reducing the foreign exchange exposure of the subsidiaries in light of the high volatility of foreign exchange rates, as actually observed in December. Other expenses incurred during the year 2015 include Euro 2.2 million (Euro 1.1 million in 2014) for reorganising executive and clerical functions at the Company and Euro 1.5 million for adjusting the fair value of investment properties according to experts' valuation.The increase in “Operating costs” is mainly connected with a greater use of the SAP information system and the resulting higher royalty fees (“Other operating income”)charged to those subsidiaries that are using the system.In 2015, the Company booked financial income in the amount of Euro 1.5 million (Euro 14 million in 2014) reflecting the fair value measurement of the convertible bond derivative under “Financial income/expenses and dividends”. Such decrease was partly compensated for by lower net financial expense totalling Euro 10.7 million and a higher dividend flow from subsidiaries in the amount of Euro 0.7 million recorded in 2015.

(in millions of Euro) 2015 2014Financial income/expenses and dividends 2.6 3.7Other operating revenues 23.5 21.3Operating costs (26.5) (25.8)Other non-operating income (expenses) (10.3) (2.1)RESULT BEFORE TAXES (10.7) (2.9)Income taxes (3.9) (4.9)NET RESULT (6.8) 2.0

As regards the statement of financial position, the table below shows the main items asof December 31, 2015, compared with the figures recorded at the end of the previous year:


(in millions of Euro) Note(*) 12.31.2015 12.31.2014Short-term assets (n) 17.4 14.4Short-term liabilities (o) (10.0) (8.9)Net working capital 7.4 5.5Equity investments (p) 404.0 397.3Other fixed assets (q) 62.8 67.6CAPITAL INVESTED 474.2 470.4Other medium and long-term liabilities (r) (0.9) (1.4)NET CAPITAL INVESTED 473.3 469.0Net financial indebtedness 305.8 307.7Shareholders' equity 167.5 161.3TOTAL 473.3 469.0


The increase in “Short-term assets” mostly reflects higher amounts receivable from the Parent Company CIR S.p.A. arising from the participation in the Group tax filing system.The increase in “Equity investments” is mainly due to a capital addition of Euro 6.4 million to the Spanish subsidiary Sogefi Filtration S.A. in the form of receivables from said subsidiary for dividends approved and yet to be paid.“Shareholders' equity” amounted to Euro 167.5 million as of December 31, 2015, up from Euro 161.3 million as of December 31, 2014. The increase mostly reflects a translation reserve set aside for the convertible bond, as the amended bond regulations required that the remaining fair value after the call option be reclassified from “Other medium/long-term financial liabilities for derivative financial instruments” to “Reserves and retained earnings (accumulated losses)”. Under a resolution passed by the Shareholders’ Meeting on April 20, 2015, no dividend was declared for 2015 and the entire profit for the year 2014 was allocated to Reserves and retained earnings.

Net financial position as of December 31, 2015 was Euro 305.8 million, showing a year-over-year net decrease of Euro 1.9 million.

(in millions of Euro) 12.31.2015 12.31.2014Short-term cash investments 45.2 36.6Short/medium-term financial receivables to third and subsidiaries 124.3 123.2Short-term financial debts (*) (130.5) (139.5)Medium/long-term financial debts (344.8) (328.0)NET FINANCIAL POSITION (305.8) (307.7)

(*) including current portions of medium/long-term financial debts.


The table below illustrates the cash flow statement of Sogefi S.p.A.:

(in millions of Euro) Note(*) 2015 2014SELF-FINANCING (s) (1.6) (0.6)Change in net working capital (t) (1.9) 5.4Other medium/long term assets/liabilities (u) 12.2 4.4CASH FLOW GENERATED BY OPERATIONS 8.7 9.2Sale of equity investments (v) - - TOTAL SOURCES 8.7 9.2Increase in intangible assets 1.9 10.7Purchase of tangible assets 0.3 - Purchase of equity investments 6.6 0.4TOTAL APPLICATION OF FUNDS 8.8 11.1FREE CASH FLOW (0.1) (1.9)Holding Company increases in capital 0.1 2.5Change in fair value derivative instruments 1.9 (3.4)Dividends paid by the Holding Company - - CHANGES IN SHAREHOLDERS' EQUITY 2.0 (0.9)Change in net financial position (w) 1.9 (2.8)Opening net financial position (w) (307.7) (304.9)CLOSING NET FINANCIAL POSITION (w) (305.8) (307.7)


In 2015, free cash flow – while still negative for Euro 0.1 million – showed an improvement (up by Euro 1.8 million) over 2014.Lower profitability, lower “Net working capital” and increased “Purchase of equity investments” in 2015 were offset by a decrease in “Other medium/long-term assets” and lower investments in intangible fixed assets compared to 2014.


PERFORMANCE BY BUSINESS DIVISION

FILTRATION BUSINESS UNIT

The following tables show the key results and economic indicators of the Filtration business unit for the year 2015 and the three previous years.

KEY ECONOMIC DATA

(in millions of Euro) 2012 2013 2014 2015 Change '15 vs '14Sales revenues 453,0 468,6 473,7 536,4 13,2%EBIT 18,8 22,3 28,4 32,2 13,5%

% on sales revenues 4,2% 4,8% 6,0% 6,0%

KEY FINANCIAL DATA

(in millions of Euro) 2012 2013 2014 2015 Change '15 vs '14Net Assets 114.3 94.5 97.5 119.7 22.9%Net financial surplus (indebtedness) 11.4 12.1 13.5 11.1 -17.9%

OTHER INDICATORS

2012 2013 2014 2015 Change '15 vs '14Number of employees 2,917 2,794 2,751 2,629 -4.4%

In 2015, the Filtration business unit revenues grew by 13.2% (+10% exchange rates being equal) to Euro 536.4 million compared to 2014. During the period under consideration, the business unit benefited from business growth in the USA, China and India and from the positive performance of original equipment segment in Europe. Revenues in South America fell as a result of exchange rate trends and persistently sluggish markets.

EBIT was Euro 32.2 million (Euro 28.4 million in 2014; +13.5%). EBIT before non-recurring items rose to Euro 36.2 million (from Euro 31.7 million in 2014), with a ratio to sales stable at 6.7% compared to 2014.

As of December 31, 2015, Net assets amounted to Euro 119.7 million compared to Euro 97.5 million at the end of 2014, whereas net financial position recorded a surplus of Euro 11.1 million versus Euro 13.5 million as of December 31, 2014.

The business unit workforce decreased from 2,751 units at the end of 2014 to 2,629 units at the end of 2015.


SUSPENSIONS BUSINESS UNIT

The following tables show the key results and economic indicators of the Suspensions business unit for the year 2015 and the three previous years.

KEY ECONOMIC DATA

(in millions of Euro) 2012 2013 2014 2015 Change '15 vs '14Sales revenues 528,6 518,6 506,6 558,0 10,1%EBIT 32,3 35,7 18,2 35,4 94,7%

% on sales revenues 6,1% 6,9% 3,6% 6,3%

KEY FINANCIAL DATA

(in millions of Euro) 2012 2013 2014 2015 Change '15 vs '14Net Assets 142.2 121.2 106.8 108.6 1.6%Net financial surplus (indebtedness) (45.2) (57.7) (64.7) (60.1) 7.1%

OTHER INDICATORS 2012 2013 2014 2015 Change '15 vs '14

Number of employees 2,571 2,714 2,582 2,663 3.1%

The Suspensions business unit closed 2015 with revenues up 10.1% (+9.2% exchange rates being equal), at Euro 558 million (Euro 506.6 million in 2014), benefiting from the business expansion in all geographical areas and in particular of the positive momentum of the passenger car business in Europe and China and from an increased market share in South America.

EBIT was Euro 35.4 million (Euro 18.2 million in 2014); EBIT before non-recurring items rose to Euro 36.8 million (up 19.9% from Euro 30.7 million in 2014), with a ratio to sales of 6.6% up from the 6.1% recorded in 2014.

Net assets as of December 31, 2015 amounted to Euro 108.6 million (versus Euro 106.8 million at the end of 2014), whereas net financial position recorded an indebtedness of Euro 60.1 million versus 64.7 million at the end of 2014. The business unit workforce at the end of 2015 increased to 2,663 units from 2,582 units as of December 31, 2014.


AIR&COOLING BUSINESS UNIT

The following tables show the key results and economic indicators of the Air&Cooling business unit for the year 2015 and the three previous years.

KEY ECONOMIC DATA

(in millions of Euro) 2012 2013 2014 2015 Change '15 vs '14Sales revenues 339.8 351.8 374.3 409.3 9.3%EBIT 14.6 7.7 14.2 (2.5) -117.7%

% on sales revenues 4.3% 2.2% 3.8% -0.6%

KEY FINANCIAL DATA

(in millions of Euro) 2012 2013 2014 2015 Change '15 vs '14Net Assets 102.0 104.8 112.6 103.7 -7.9%

Net financial surplus (indebtedness) 22.6 46.4 56.5 34.6 -38.9%

OTHER INDICATORS 2012 2013 2014 2015 Change '15 vs '14

Number of employees 1,174 1,253 1,263 1,350 6.9%

In 2015, the Air&Cooling business unit revenues grew by 9.3% (+7.5% exchange rates being equal) to Euro 409.3 million compared to 2014. During the period under consideration, the business unit benefited from the positive performance in non-European markets, North America and China for the most part.

EBIT was Euro -2.5 million (versus Euro 14.2 million in 2014). EBIT before non-recurring items totalled Euro 11.2 million (Euro 21 million in 2014).

Net assets as of December 31, 2015 amounted to Euro 103.7 million (versus Euro 112.6 million at the end of 2014), whereas net financial position recorded an indebtedness of Euro 34.6 million versus 56.5 million at the end of 2014.

The business unit workforce at the end of 2015 increased to 1,350 units from 1,263 units as of December 31, 2014.

OUTLOOK FOR OPERATIONS

In 2016 the global car market is expected to increase by 2.5%. Sogefi expects to continue the positive trends in North America, China and India. In Europe after the important business expansion seen in 2015, the company expects a more modest growth, while in South America market conditions remain difficult. Sogefi plans to expand its presence in the North American markets through an investment of Euro 17 million at Monterrey (Mexico) in a new plant serving all three business units.


MANAGEMENT OF THE MAIN BUSINESS RISKS

In line with international best practice, the Group has initiated a structured, formal “ERM - Enterprise Risk Management” process that involves the joint efforts of management across all operations worldwide under the coordination of the Group's Chief Risk Officer.

Management at worldwide operations will identify and assess both potential and residual risks based on a specific risk model associated with the Group's strategic goals and define risk mitigation strategies.

More specifically, the Group's Chief Risk Officer is to first prioritise risk areas within the risk model based on the strategic goals and guidelines defined in the business plan (key value drivers) (such as raw materials/commodities, economic situation, exchange rates, technology innovation, customer portfolio balancing, competitor monitoring, etc.), and define reference economic-financial parameters to measure risks and their impact (impact on revenues, EBIT, cash flow, etc.) where applicable. Managers at a business unit and local level are then required to validate/supplement exposure findings in the identified priority risk areas and submit risk mitigation plans to help complete the overall Sogefi Group ERM Report. This method ensures that the following elements are in place and kept constantly up to date:

� target levels of exposure to priority risks;� risk management strategies in line with existing risk attitude (transfer, reduce,

eliminate, mitigate risk);� action plans and management approaches to keep exposure levels within target

limits.The findings of the Sogefi Group ERM Report are also used to define the Internal Audit Action Plan adopting a risk-based approach, in line with international best practice. In detail, the Internal Audit Action Plan is defined yearly based directly on the findings of the assessments made as part of the Enterprise Risk Management process, and focussing on highest-risk areas identified by the ERM assessments.

For more details of the risk assessment method and the tasks and functions of the corporate Control and Risk System please read the “Code of Conduct of Sogefi S.p.A.”

attached to the “Annual Report on Corporate Governance” for the year 2015 available at www.sogefigroup.com.

The following section looks at the main risks and uncertainties that the Group is potentially exposed to in the achievement of its business objectives/operations, together with a description of the ways in which said risks are managed.

To facilitate comprehension, risk factors have been grouped on the basis of their origin into homogeneous risk categories, with distinction between those that arise outside the Group (external risks) and those associated with the characteristics and structure of the organisation itself (internal risks).

In terms of external risks, first of all, the Group adopts a centralised management approach to financial risk (which includes risks of changes in interest rates and


exchange rates, risks of changes in raw materials prices, credit risk and liquidity risk), described in further detail in the Explanatory and Supplementary Notes to the Consolidated Financial Statements which should be referred to1.

With regard to risks relating to competitors, the Group is one of the leading players in the suspension components, filtration, engine cooling and air management sectors at a worldwide level, and benefits from a progressive consolidation of the market and the resulting gradual reduction in the number of competitors. With regard to the Suspensions sector, the Group benefits from objective barriers to the entry of new competitors, as this sector is structurally capital intensive and a wide technological and qualitative gap puts manufacturers in low-cost countries at a disadvantage. Similarly, the technological and qualitative gap represents a barrier to the entry of new competitors in the original equipment Filtration and Air&Cooling sectors as well, while in the spare part sector, important barriers to entry are represented by the Group’s exhaustive product range and by the lack of notoriety of the brands of manufacturers in low-cost countries.

As regards the risks associated with customer management, as well as the management of credit risk already mentioned within financial risk, the Group manages the risk of the concentration of demand by appropriately diversifying its customer portfolio, both from a geographic perspective and in terms of distribution channel (the major world manufacturers of cars and industrial vehicles in the original equipment market and leading international customers in the spare parts market).

Over the last few years, the Group has significantly reduced credit risk in the independent aftermarket (IAM), whereas the credit risk in original equipment (OEM) and original equipment spares (OES) markets is limited because these customers are world-leading auto makers and industrial vehicle manufacturers.

As regards the risks associated with supplier management, increased focus on multi-sourcing, especially from non-European suppliers and the ongoing search for alternate suppliers, helps to reduce the risk of being excessively dependent on key suppliers/single suppliers.It should be noted that this multi-sourcing approach, i.e. sourcing each raw material from multiple suppliers based in different world countries helps to reduce the risk of changes in raw materials prices mentioned earlier when discussing the management of financial risk.

The Group places particular attention on the management of country risk, given the considerable geographic diversification of its business activities at world level.

In terms of the risks associated with technological innovation, the Group constantly seeks to innovate products and production processes. Specifically, the Group's pipeline includes certain product/process innovations that are not available to key competitors, such as new elastic suspension components made from 1 For a detailed description of the centralised management of financial risk adopted by the Group, please see the “Explanatory and Supplementary Notes to the Consolidated Financial Statements”, Chap. E, Note no. 39.


composite materials, a new oil cooling technology that uses aluminium foam and an innovative particulate emission control system.

With regard to the risks related to health, safety and the environment, each subsidiary has its own internal function that manages HSE in accordance with local laws and in accordance with Sogefi Group’s guidelines. More specifically, the Holding Company Sogefi S.p.A. has approved an Environmental Policy for Health and Safety, which sets out the principles that all operations of subsidiaries should observe for the organisation of the HSE management system. Special emphasis is placed on monitoring the risk of accidents, which is a pillar of the plant operating approach “Kaizen Way”

adopted at all production sites across the world and coordinated by a dedicated central management team at Group level.In correlation with the environmental policy, 17 plants in the Suspensions business unit, 13 in the Filtration business unit and 10 in the Air and Cooling business unit are currently certified as complying with the international standard ISO 14001. With regard to OHSAS 18001, 2 plants in the Filtration business unit, 2 in the Air and Cooling business unit and 1 in the Suspensions business unit have had their health and safety systems certified to this standard. The activities carried out in the plants are audited by both experienced internal auditors and external auditors. Particular attention is paid to personnel training in order to consolidate and disseminate a safety culture.

As regards internal risks, namely risks mostly connected with internal activities and with the characteristics of the organisation itself, one of the major risks identified, monitored and actively managed by the Group is the risk of product quality/complaints due to non conformity: in this regard, it is worth drawing attention to the fact that the Sogefi Group considers ongoing quality improvement as a fundamental objective to meet customers’ needs. The same focus on quality is placed on the supplier selection and approval process, as well as in the on-going quality control of supplies used in the manufacturing process (raw materials, semi-finished products, etc.), in order to prevent non-conformities in Group products partly or totally due to defective supplies. In correlation with the Group's quality policy, 20 plants in the Suspensionsbusiness unit, 15 in the Filtration business unit and 9 in the Air and Cooling business unit are currently certified as complying with the international standard ISO TS 16949. Some plants’ systems are certified according to business specifications. Unforeseeable risk is adequately covered by insurance, as regards both third party product liability and the potential launch of product recall campaigns.

With regard to the risks associated with adequacy of managerial support (e.g. the effectiveness/efficiency of Group monitoring and reporting, of internal information flows etc.), information can be found in the “Annual Report on Corporate Governance”.

In terms of the set of risks associated with human resource management, the Group acknowledges the key role played by its human resources and the importance of maintaining clear relationships based on mutual loyalty and trust, as well as on the observance of conduct dictated by its Code of Ethics. Working relationships are managed and coordinated in full respect of workers’ right and in full acknowledgement of their contribution, with a view to encouraging development


and professional growth. Established selection processes, career paths, and incentive schemes are the tools used to make the most of human resources. The Group also uses a system of annual performance appraisals based on a clear definition of shared objectives, which can be measured in numerical, economic, financial, qualitative and individual terms. A variable bonus is paid depending on the degree to which said objectives are achieved. As regards medium-long term incentive schemes, again in 2015 a stock grant plan has been allocated to top management positions.

Lastly, with regard to the risks associated to the management of Information Systems, the Group manages the risks linked to the potential incompleteness/inadequacy of IT infrastructure and the risks related to the physical and logical safety of systems in terms of the protection of confidential data and information by means of specific units at group level.


OTHER INFORMATION

RELATED PARTY TRANSACTIONS

Information on the most important economic transactions and balances with related parties is provided in the explanatory and supplementary notes to the consolidated financial statements, in the section entitled “Related Party Transactions”, as well as in the explanatory and supplementary notes to the statutory financial statements.Dealings between Group companies are conducted at arm’s length, taking into account the quality and type of services rendered.

We point out that no transactions have been carried out with related parties or with entities or individuals other than related parties that, according to the definition used by Consob, are atypical or unusual, do not relate to the normal business activity or have a significant impact on the Group's results, balance and financial position.

In 2010, in accordance with Consob Resolution no. 17221 of March 12, 2010 and subsequent amendments, the Company’s Board of Directors appointed the Related Party Transactions Committee, establishing that the members are to be the same as those of the Control and Risks Committee and approved the Discipline on related-party transactions, which had previously received a favourable opinion of the Control and Risks Committee. The purpose of this Discipline is to establish the principles of conduct that the Company is bound to observe to guarantee the correct management of related-party transactions. This Discipline is available on the Company's website at www.sogefigroup.com, in the “Investor – Corporate Governance” section.

In accordance with art. 2497-bis of the Italian Civil Code, we point out that Sogefi S.p.A. is subject to policy guidance and coordination by its parent company CIR S.p.A..

CORPORATE GOVERNANCE

Note that the “Annual Report on Corporate Governance” for 2015 was approved at the meeting of the Board of Directors that was called to approve the draft financial statements for the year ended December 31, 2015 and is made available to Shareholdersas provided for by the law. The Report will also be available on the Company's website at www.sogefigroup.com, in the “Investor – Corporate Governance” section.

The Report also contains the information prescribed by art. 123-bis of the Consolidated Law on Financial, including information on ownership structures and compliance with the codes of conduct that the Company has adopted. Generally speaking, the Company's Corporate Governance is in line with the recommendations and rules contained in the Code of Conduct.

As regards Legislative Decree 231/2001, which brings domestic regulations on administrative liability of legal entities into line with the international conventions signed by Italy, in February 2003 the Board of Directors adopted a Code of Ethics for the Sogefi Group. The Code clearly defines the values that the Group believes in as the


basis on which to achieve its objectives. It lays down rules of conduct which are binding on directors, employees and others who have ongoing relations with the Group. On February 26, 2004 the Company also adopted an "Organization, Management and Control Model as per Legislative Decree no. 231 of June 8, 2001" following the guidelines of the decree, with a view to ensuring conditions of fairness and transparency in the carrying on of the company's affairs and business activities. A Supervisory Body was also set up with the task of monitoring the functioning, effectiveness and observance of the Model, as laid down in the decree.

TREASURY SHARES

As of December 31, 2015, the Holding Company has 3,252,144 treasury shares in its portfolio, corresponding to 2.74% of capital, at an average price of Euro 2.28 each. In 2015, treasury shares decreased after they were assigned to beneficiaries of stock-based compensation plans.

DECLARATIONS PURSUANT TO ARTICLES 36 AND 37 OF CONSOB REGULATION 16191 OF OCTOBER 29, 2007

In accordance with the obligations set forth in article 2.6.2. of the Regulations of Borsa Italiana, and with reference to the requirements referred to in articles 36 and 37 of Consob Resolution 16191 of October 29, 2007 and subsequent amendments, it is hereby stated that there are no circumstances such as to prevent the listing of Sogefi stock on the Mercato Telematico Azionario organised and managed by Borsa Italiana S.p.A. insofar as: Sogefi S.p.A. (the “Company”) has obtained the articles of association and the composition and powers of the related control bodies from foreign subsidiaries based in countries that are not part of the European Union and are of material significance to the Company; the same foreign subsidiaries provide the Company’sauditor with information necessary to perform annual and interim audits of Sogefi and use an administrative/accounting system appropriate for regular reporting to the Management and to the auditors of the Company of the income statement, balance and financial data necessary for the preparation of the consolidated financial statements.Sogefi S.p.A. will also publish the financial statements of foreign subsidiaries (based in non-European countries and with material significance to the Company), prepared for the purpose of the consolidated financial statements as of December 31, 2015, in accordance with the procedures indicated in the Consob regulation.

In consideration of the fact that Sogefi is subject to policy guidance and coordination by its parent company CIR – Compagnie Industriali Riunite S.p.A., it is also hereby stated that there are no circumstances such as to prevent the listing of Sogefi stock on the Mercato Telematico Azionario organised and managed by Borsa Italiana S.p.A. insofar as the Company has fulfilled its publication obligations pursuant to article 2497-bis ofthe Italian Civil Code; has independent decision-making powers in relations with customers and suppliers; does not hold a cash pooling system with CIR. The Company has a cash pooling system with subsidiaries that satisfies the interest of the company. This situation enables the Group’s finances to be centralised, thus reducing the need to


utilise funding from banks, and therefore minimising financial charges. On April 18, 2000, the Company set up a Control and Risks Committee and an Appointments and Remuneration Committee that at present are fully made up by independent administrators. Lastly, it is hereby stated that as of December 31, 2015, the Company’s Board of Directors comprised 10 members, 6 of which meet the independence criteria, and therefore a sufficient number to guarantee that their contribution has an adequate weight when taking board decisions.

EXEMPTION FROM THE OBLIGATION TO PUBLISH INFORMATION DOCUMENTS UNDER ARTICLE 70, PARAGRAPH 8 AND ARTICLE 71, PARAGRAPH 1-BIS OF THE RULES FOR ISSUERS

In relation to art. 70, paragraph 8 and art. 71, paragraph 1-bis of Consob Regulation no. 11971/99, as amended by Consob Resolution no. 11971/99, on October 23, 2012, the Board of Directors resolved to make use – effective today – of the exemption from the obligation to publish the information documents required for significant transactions consisting in mergers, spin-offs, capital increases by means of the conferral of assets in kind, takeovers and transfers.

OTHER

SOGEFI S.p.A. has its registered office in Via Ulisse Barbieri 2, Mantova and its operating offices in Via Flavio Gioia 8, Milano and in Avenue du 8 Mai 1945 n. 7, Guyancourt.

The Sogefi stock has been listed on the Milano Stock Exchange since 1986 and has been traded on the STAR segment since January 2004.

This report, which relates to the period January 1 to December 31, 2015, was approved by the Board of Directors on February 29, 2016.

SIGNIFICANT SUBSEQUENT EVENTS

No significant events occurred after the end of the reporting period.


PROPOSED ALLOCATION OF NET PROFIT FOR THE YEAR

The statutory financial statements as of December 31, 2015 that we submit for your approval show a net loss of Euro 6,781,187.01, which we propose to cover entirely using “Retained earnings”.

Milan, February 29, 2016THE BOARD OF DIRECTORS


ANNEX: NOTES RECONCILING THE FINANCIAL STATEMENTS SHOWN IN THE DIRECTORS' REPORT AND THE FINANCIAL STATEMENTS CONTAINED IN THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE HOLDING COMPANY'S STATUTORY FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IAS/IFRS Notes relating to the Consolidated Financial Statements

(a) the heading agrees with “Total working capital” in the Consolidated Statement Of Financial Position;(b) the heading agrees with the sum of the line items “Trade and other payables”, “Tax payables” and “Other

current liabilities” in the Consolidated Statement Of Financial Position;(c) the heading agrees with the sum of the line items “Investments in joint ventures” and “Other financial

assets available for sale” in the Consolidated Statement Of Financial Position;(d) the heading agrees with the sum of the line items “Total fixed assets”, “Other receivables”, “Non-current

trade receivables”, “Deferred tax assets” and “Non-current assets held for sale” in the Consolidated Statement Of Financial Position;

(e) the heading agrees with the line item "Total other long-term liabilities" in the Consolidated Statement Of Financial Position;

(f) the heading agrees with the sum of the line items “Net result”, “Non-controlling interests”, “Depreciation, amortisation and writedowns”, “Accrued costs for stock-based incentive plans”, “Losses/(gains) on equity investments in associates and joint ventures”, “Provisions for risks, restructuring and deferred taxes” and “Post-retirement and other employee benefits” in the Consolidated Cash Flow Statement;

(g) the heading agrees with the sum of the line items of the Consolidated Cash Flow Statement “Exchange differences on private placement”, “Recognition in the income statement of the fair value reserve in cash flow hedge” and “Other medium/long term assets/liabilities” in the Consolidated Cash Flow Statement, excluding movements relating to financial receivables/payables and movements in Income Statement, of the fair value reserve no longer in hedge accounting;

(h) the heading corresponds to the line item “Sale of subsidiaries (net of cash and cash equivalents) and associates” in the Consolidated Cash Flow Statement;

(i) the heading agrees with the sum of the line items “Losses/(gains) on disposal of fixed assets and non-current assets held for sale”, “Sale of property, plant and equipment” and “Sale of intangible assets” in the Consolidated Cash Flow Statement;

(l) the heading agrees with the line items “Exchange differences” in the Consolidated Cash Flow Statement, excluding exchange differences on medium/long-term financial receivables and payables;

(m) these headings differ from those shown in the Consolidated Cash Flow Statement as they refer to the total net financial position and not just to cash and cash equivalents. Notes relating to the Holding Company's Statutory Financial Statements

(n) the heading agrees with “Total working capital” (“Totale attivo circolante operativo”) in the Holding Company's statutory Statement Of Financial Position;

(o) the heading agrees with the sum of the line items “Trade and other payables” (“Debiti commerciali e altri debiti”), “Tax payables” (“Debiti per imposte”) and “Other current liabilities” (“Altre passività correnti”)in the Holding Company's statutory Statement Of Financial Position;

(p) the heading agrees with the sum of the line items “Equity investments in subsidiaries” (“Partecipazioni in società controllate”), “Equity investments in associates” (“Partecipazioni in società collegate”) and “Other financial assets available for sale” (“Altre attività finanziarie disponibili per la vendita”) in the Holding Company's statutory Statement Of Financial Position;

(q) the heading agrees with the sum of the line items “Total fixed assets” (“Totale immobilizzazioni”), “Other receivables” (“Altri crediti”) and “Deferred tax assets” (“Imposte anticipate”) in the Holding Company's statutory Statement Of Financial Position;

(r) the heading agrees with the line item "Total other long-term liabilities" (“Totale altre passività a lungo termine”) in the Holding Company's statutory Statement Of Financial Position;

(s) the heading agrees with the sum of the line items “Net result” (“Utile netto d’esercizio”), “Writedown of equity investments“ ("Svalutazione partecipazioni"), “Depreciation and amortisation” (“Ammortamenti immobilizzazioni materiali e immateriali”), “Change in fair value of property investments” (“Variazione fair value investimenti immobiliari”), “Accrual to Income Statement for fair value of cash flow hedging instruments” (“Stanziamento a conto economico fair value derivati cash flow hedge”), “Accrued costs for stock-based incentive plans” (“Accantonamenti costi per piani di incentivazione basati su azioni”), “Accrued costs for phantom stock options” (“Accantonamenti costi per Phantom Stock Option”), “Liquidation of phantom stock option provision” (“Liquidazione fondo Phantom stock option”) and “Netchange in provision for employment termination indemnities” (“Variazione netta fondo trattamento di fine rapporto”) as well as the change of deferred tax assets/liabilities included in the line “Other medium/long-term assets/liabilities” (“Altre attività/passività a medio lungo termine”) of the Holding Company's statutory cash flow statement;


(t) the heading agrees with the sum of the line items “Change in net working capital” (“Variazione del capitale circolante netto”), “Change in tax receivables/payables” (“Variazione dei crediti/debiti per imposte”) and “Payables for purchases of intangible fixed assets” (“Debiti per acquisti immobilizzazioni immateriali”) of the Holding Company's statutory Cash Flow Statement;

(u) the heading is included in the line item “Other medium/long-term assets/liabilities” (“Altre attività/passività a medio lungo termine”) in the Holding Company's Statutory Cash Flow Statement, excluding movements relating to financial receivables/payables;

(v) the heading reflects line item "Sale of equity investments" in the Holding Company's Statutory Cash Flow Statement;

(w) these headings differ from those shown in the Holding Company's statutory cash flow statement as they refer to the total net financial position and not just to cash and cash equivalents.


DEFINITION OF THE PERFORMANCE INDICATORS

In accordance with recommendation CESR/05-178b published on November 3, 2005, the criteria used for constructing the main performance indicators deemed by the management to be useful for the purpose of monitoring Group performance are provided below.

ROE: is calculated as the ratio of “Group net result” for the year under way to the average “Total shareholders' equity attributable to the holding company” (the average is calculated with reference to the punctual values at the end of the year under way and of the previous year).

ROI: is calculated as the ratio of “EBIT” relating to the year under way to the average “Net capital invested”, as set forth in the table of the consolidated capital structure included in the “Report on Operations”, (the average is calculated with reference to the punctual values at the end of the year under way and of the previous year).

EBITDA: starting from financial year 2012, EBITDA is calculated as the sum of "EBIT", “Depreciation and Amortisation” and the writedowns of tangible and intangible fixed assets included in the item “Other non-operating expenses (income)”.

EBITDA before non-recurring expenses: it is calculated by summing “EBITDA” and the expenses and revenues arising from non-ordinary operations, such as “Restructuring costs”, “Losses (gains) on disposal” and other non-recurring items included in “Other non-operating expenses (income)”.

Normalised EBITDA: is calculated by summing “EBITDA” and the expenses and revenues arising from non-ordinary operations, such as “Restructuring costs”, “Losses (gains) on disposal”, and non-recurring items included in “Other non-operating expenses (income)”, excluding costs on quality and product warranties.

EBIT before non-recurring expenses: it is calculated by summing “EBIT” and the expenses and revenues arising from non-ordinary operations, such as “Restructuring costs”, “Losses (gains) on disposal” and other non-recurring items included in “Other non-operating expenses (income)”.

GEARING: is calculated as the “Net financial position” / “Total Shareholders' equity” ratio.

Sogefi | 2015 Consolidated Financial Statements – Group Structure 209

SOGEFI GROUP STRUCTURE: CONSOLIDATED COMPANIES

56,03% (*)

100% 99.998% 100% 100%

Sogefi Sogefi Purchasing S.A.S. Allevard Rejna Allevard Sogefi Systèmes

100% Filtration Ltd France Autosuspensions S.A. U.S.A. Inc. Moteurs S.A.S.

Great Britain France Usa France

Sogefi Allevard Springs Ltd Systèmes 100%

100% Filtration d.o.o. 100% Great Britain Moteurs China, S.à.r.l.

Slovenia Luxembourg

100%

Sogefi (SUZHOU) Allevard Molas 0.003% Sogefi Engine Systems

Auto Parts Co., Ltd 99.997% do Brasil Ltda Hong Kong Ltd

China Brazil Hong Kong

50%

Filtrauto S.A. Allevard Rejna 10% Mark IV ASSET (Shanghai)

France 89.97% Argentina S.A. Auto Parts Co., Ltd

Argentina China

13,92%

86.08% Sogefi Allevard Federn GmbH Lpdn GmbH Sogefi Engine Systems

Filtration S.A. 100% Germany 100% Germany Canada Corp. 100%

Spain Canada

5.176% 99.97%

Sogefi Filtration Sogefi Filtration Shanghai Allevard Sogefi Engine Systems

do Brasil Ltda 94.248% Argentina S.A. 60.58% Spring Co., Ltd Mexico S. de R.L. de C.V. 0.03%

Brazil Argentina China Mexico

0.575%

Sogefi Iberica de Sogefi Engine Systems

99.88% Rejna S.p.A. 50% Suspensiones S.L. (ISSA) USA, Inc. 100%

Italy Spain USA

0.02%

Shanghai United Springs B.V. Sogefi MNR Engine Systems

100% Sogefi Auto Parts Co., Ltd 100% The Netherlands India Pvt Ltd 24.98%

China India

45%

United Springs S.A.S. S.C. Systèmes

100% France Moteurs S.r.l. 99.9997%

Romania

Controlling interests United Springs Ltd

Non- controlling interests 100% Great Britain

S. ARA Composite S.A.S.

95% France

Allevard IAI

74.23% Suspension Private Ltd

India

(*) 57.61% of shares outstanding (excluding treasury shares)

100%

99.9999981%

0,0003%

100%

0.0000019%

210 Sogefi | 2015 Consolidated Financial Statements

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF FINANCIAL POSITION(in thousands of Euro)

ASSETS Note 12.31.2015 12.31.2014

CURRENT ASSETS Cash and cash equivalents 5 121,892 124,033 Other financial assets 6 6,335 9,490

Working capital Inventories 7 159,694 144,142 Trade receivables 8 143,489 148,083 Other receivables 8 7,915 6,884 Tax receivables 8 26,753 22,564 Other assets 8 3,974 3,599 TOTAL WORKING CAPITAL 341,825 325,272TOTAL CURRENT ASSETS 470,052 458,795NON-CURRENT ASSETSFIXED ASSETS Land 9 14,299 14,286 Property, plant and equipment 9 232,610 224,427 Other tangible fixed assets 9 5,343 5,348 Of which: leases 6,832 5,148 Intangible assets 10 284,050 282,996TOTAL FIXED ASSETS 536,302 527,057OTHER NON-CURRENT ASSETS Investments in joint ventures 11 - - Other financial assets available for sale 12 439 439 Non-current trade receivables 13 4 4 Financial receivables 13 13,156 157 Other receivables 13 34,666 34,626 Deferred tax assets 14-20 65,301 71,126TOTAL OTHER NON-CURRENT ASSETS 113,566 106,352TOTAL NON-CURRENT ASSETS 649,868 633,409NON-CURRENT ASSETS HELD FOR SALE 15 - - TOTAL ASSETS 1,119,920 1,092,204

Sogefi | 2015 Consolidated Financial Statements 211

LIABILITIES Note 12.31.2015 12.31.2014

CURRENT LIABILITIES Bank overdrafts and short-term loans 16 17,843 13,426 Current portion of medium/long-term financial debts and other loans 16 74,445 64,508 Of which: leases 1,252 914 TOTAL SHORT-TERM FINANCIAL DEBTS 92,288 77,934 Other short-term liabilities for derivative financial instruments 16 325 350 TOTAL SHORT-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS 92,613 78,284 Trade and other payables 17 325,421 309,808 Tax payables 17 6,071 5,323 Other current liabilities 18 9,686 8,096TOTAL CURRENT LIABILITIES 433,791 401,511NON-CURRENT LIABILITIES MEDIUM/LONG-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS Financial debts to bank 16 141,080 131,617 Other medium/long-term financial debts 16 218,417 203,648 Of which: leases 8,135 6,481 TOTAL MEDIUM/LONG-TERM FINANCIAL DEBTS 359,497 335,265 Other medium/long-term financial liabilities for derivative financial instruments 16 11,562 24,464

371,059 359,729OTHER LONG-TERM LIABILITIES Long-term provisions 19 79,215 104,326 Other payables 19 9,195 6,988 Deferred tax liabilities 20 36,264 38,864TOTAL OTHER LONG-TERM LIABILITIES 124,674 150,178TOTAL NON-CURRENT LIABILITIES 495,733 509,907SHAREHOLDERS' EQUITY Share capital 21 61,681 61,631 Reserves and retained earnings (accumulated losses) 21 108,042 95,948 Group net result for the year 21 1,120 3,639TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO THE HOLDING COMPANY 170,843 161,218 Non-controlling interests 21 19,553 19,568TOTAL SHAREHOLDERS' EQUITY 190,396 180,786TOTAL LIABILITIES AND EQUITY 1,119,920 1,092,204

TOTAL MEDIUM/LONG-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS


CONSOLIDATED INCOME STATEMENT(in thousands of Euro)

NoteAmount % Amount %

Sales revenues 23 1,499,050 100.0 1,349,391 100.0Variable cost of sales 24 1,079,129 72.0 960,019 71.1

CONTRIBUTION MARGIN 419,921 28.0 389,372 28.9Manufacturing and R&D overheads 25 146,045 9.7 128,794 9.5Depreciation and amortization 26 64,371 4.3 58,003 4.3Distribution and sales fixed expenses 27 45,198 3.0 41,833 3.1Administrative and general expenses 28 72,284 4.8 70,955 5.3Restructuring costs 30 6,915 0.5 16,195 1.2Losses (gains) on disposal 31 (1,597) (0.1) (66) - Exchange losses (gains) 32 3,590 0.2 618 - Other non-operating expenses (income) 33 32,373 2.2 24,769 1.9 - of which non-recurring 16,142 10,333EBIT 50,742 3.4 48,271 3.6Financial expenses (income), net 34 32,778 2.2 26,818 2.0- of which fair value of the embedded derivative (convertiblebond) (1,450) (13,960)- of which other net financial expenses (income) 34,228 40,778Losses (gains) from equity investments 35 - - - -

RESULT BEFORE TAXES AND NON-CONTROLLING INTERESTS 17,964 1.2 21,453 1.6Income taxes 36 12,913 0.9 13,058 1.0INTERESTS 5,051 0.3 8,395 0.6Loss (income) attributable to non-controlling interests 21 (3,931) (0.2) (4,756) (0.3)GROUP NET RESULT 1,120 0.1 3,639 0.3

Earnings per share (EPS) (Euro): 38Basic 0.010 0.032Diluted 0.008 0.027

20142015


CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME(in thousands of Euro)

Note 2015 2014Net result before non-controlling interests 5,051 8,395Other Comprehensive IncomeItems that will not be reclassified to profit or loss - Actuarial gain (loss) 21 7,527 (21,698) - Tax on items that will not be reclassified to profit or loss 21 (1,852) (1,170)Total items that will not be reclassified to profit or loss 5,675 (22,868)Items that may be reclassified to profit or loss - Profit (loss) booked to cash flow hedging reserve 21 4,831 190 - Tax on items that may be reclassified to profit or loss 21 (1,731) 5,316 - Profit (loss) booked to translation reserve 21 (9,834) 6,837Total items that may be reclassified to profit or loss (6,734) 12,343Other Comprehensive Income (1,059) (10,525)Total comprehensive result for the period 3,992 (2,130)Attributable to: - Shareholders of the Holding Company (148) (7,603) - Non-controlling interests 4,140 5,473


CONSOLIDATED CASH FLOW STATEMENT(in thousands of Euro)

2015 2014Cash flows from operating activities Net result 1,120 3,639

Adjustments: - non-controlling interests 3,931 4,756 - depreciation, amortization and writedowns 64,751 61,184 - expenses recognised for share-based incentive plans 642 852 - expenses recognised for phantom stock option plans 8 1,000 - payments of phantom stock options - (2,299) - exchange rate differences on private placement 10,910 11,333 - (not paid) interest expense on bonds 3,150 1,907 - provision in income statement of fair value derivates in cash flow hedge (10,510) (6,564) - change in fair value of the call option (Embedded derivative) (1,450) (13,960) - losses/(gains) on disposal of fixed assets and non-current assets held for sale (1,597) (66) - losses/(gains) on sale of equity investments in associates and joint ventures - - - provisions for risks, restructuring and deferred taxes (16,350) 1,235 - post-retirement and other employee benefits (717) (2,786) - change in net working capital (4,199) 20,370 - other medium/long-term assets/liabilities 1,896 (5,693)CASH FLOWS FROM OPERATING ACTIVITIES 51,585 74,908INVESTING ACTIVITIESPurchase of property, plant and equipment (51,266) (42,278)Purchase of intangible assets (30,377) (42,129)Net change in other securities 3,005 493Sale of subsidiaries (net of cash and cash equivalents) and associates - - Sale of property, plant and equipment 1,857 3,880Sale of intangible assets 768 7NET CASH FLOWS FROM INVESTING ACTIVITIES (76,013) (80,027)FINANCING ACTIVITIESCapital increase in subsidiaries from third parties 82 - Net change in capital 145 2,523Net purchase of treasury shares - - Dividends paid to Holding Company shareholders and non-controlling interests (4,341) (2,597)New (repayment of) bonds - 98,235New (repayment of) long-term loans 17,933 (102,623)New (repayment of) finance leases 1,239 (1,115)NET CASH FLOWS FROM FINANCING ACTIVITIES 15,058 (5,577)(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (9,370) (10,696)Balance at the beginning of the period 110,606 118,459(Decrease) increase in cash and cash equivalents (9,370) (10,696)Exchange differences 2,813 2,844BALANCE AT THE END OF THE PERIOD 104,049 110,607

ADDITIONAL INFORMATION OF CASH FLOW STATEMENTTaxes paid (14,304) (12,703)Financial expenses paid (34,142) (33,536)Financial income collected 1,806 1,026

NB: this table shows the elements that bring about the change in cash and cash equivalents, as expressly required by IAS 7 (in particular the net balance between “Cash and cash equivalents” and “Bank overdrafts and short-term loans” included bann overdrafts repayable on demand). The cash flow statement included in the Report of the board of directors on operations shows the various operational components of cash flow, thereby explaining all of the changes in the overall net financial position.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(in thousands of Euro)

Non-controlling

interests

Total

Balance at December 31, 2013 60,924 86,439 21,124 168,487 20,426 188,913Paid share capital increase 707 1,816 - 2,523 - 2,523Allocation of 2013 net profit: Legal reserve - 20 (20) - - - Dividends - - - - (2,597) (2,597) Retained earnings - 21,104 (21,104) - - - Recognition of share-based incentive plans - 852 - 852 - 852Other changes - (3,041) - (3,041) (3,734) (6,775)Comprehensive result for the periodFair value measurement of cash flow hedging instruments - 190 - 190 - 190Actuarial gain (losses) - (21,694) - (21,694) (4) (21,698)Tax on items booked in Other Comprehensive Income - 4,146 - 4,146 - 4,146Currency translation differences - 6,116 - 6,116 721 6,837Net result for the period - - 3,639 3,639 4,756 8,395Total comprehensive result for the period - (11,242) 3,639 (7,603) 5,473 (2,130)

Balance at December 31, 2014 61,631 95,948 3,639 161,218 19,568 180,786Paid share capital increase 50 95 - 145 82 227Allocation of 2014 net profit: Legal reserve - 300 (300) - - - Dividends - - - - (4,341) (4,341) Retained earnings - 3,339 (3,339) - - - Recognition of share-based incentive plans - 642 - 642 - 642Fair value embedded derivative (convertiblebond) - 9,090 - 9,090 - 9,090Other changes - (104) - (104) 104 - Comprehensive result for the periodFair value measurement of cash flow hedging instruments - 4,831 - 4,831 - 4,831Actuarial gain (losses) - 7,527 - 7,527 - 7,527Tax on items booked in Other Comprehensive Income - (3,583) - (3,583) - (3,583)Currency translation differences - (10,043) - (10,043) 209 (9,834)Net result for the period - - 1,120 1,120 3,931 5,051Total comprehensive result for the period - (1,268) 1,120 (148) 4,140 3,992Balance at December 31, 2015 61,681 108,042 1,120 170,843 19,553 190,396

Total

Attributable to the shareholders of the parent company

Reserves and retained earnings

(accumulated losses)

Net result for the period

Share capital

216 Sogefi | 2015 Consolidated Financial Statements – Explanatory and Supplementary Notes

EXPLANATORY AND SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: CONTENTS

Chapter Note no. DESCRIPTIONA GENERAL ASPECTS

1 Content and format of the consolidated financial statements2 Consolidation principles and accounting policies3 Financial assets

B SEGMENT INFORMATION4 Operating segments

C NOTES ON THE MAIN ITEMS OF THE STATEMENT OF FINANCIAL POSITIONC1 ASSETS

5 Cash and cash equivalents6 Other financial assets7 Inventories8 Trade and other receivables9 Tangible fixed assets10 Intangible assets11 Investments in joint ventures12 Other financial assets available for sale13 Financial receivables and other non-current receivables14 Deferred tax assets15 Non-current assets held for sale

C2 LIABILITIES16 Financial debts to banks and other financing creditors17 Trade and other current payables18 Other current liabilities19 Long-term provisions and other payables20 Deferred tax assets and liabilities21 Share capital and reserves22 Analysis of the net financial position

D NOTES ON THE MAIN INCOME STATEMENT ITEMS23 Sales revenues24 Variable cost of sales25 Manufacturing and R&D overheads26 Depreciation and amortisation27 Distribution and sales fixed expenses28 Administrative and general expenses29 Personnel costs30 Restructuring costs31 Losses (gains) on disposal32 Exchange (gains) losses33 Other non-operating expenses (income)34 Financial expenses (income), net35 Losses (gains) from equity investments36 Income taxes37 Dividends paid38 Earnings per share (EPS)

E 39 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENTF 40 RELATED PARTY TRANSACTIONSG COMMITMENTS AND RISKS

41 Operating leases42 Investment commitments43 Guarantees given44 Other risks45 Potential liabilities46 Atypical or unusual transactions47 Subsequent events

H GROUP COMPANIES48 List of Group companies

Sogefi | 2015 Consolidated Financial Statements – Explanatory and Supplementary Notes 217

A) GENERAL ASPECTS

SOGEFI is an Italian Group that is market leader in the field of components for motor vehicles, specializing in engine and cabin filtration systems, air intake and engine cooling systems, and suspension components.SOGEFI is present in 3 continents and 18 countries, with 53 locations, of which 42 are production sites. It is a multinational group and a partner of the world's largest motor vehicle manufacturers.

The Holding Company, Sogefi S.p.A., has its registered offices in Via Ulisse Barbieri 2, Mantova and its operating offices in Via Flavio Gioia 8, Milano and in Avenue du 8 Mai 1945, n.7 in Guyancourt.The Sogefi stock has been listed on the Milano Stock Exchange, organised and managed by Borsa Italiana S.p.A. since 1986 and has been traded on the STAR segment since January 2004.The Holding Company, Sogefi S.p.A., is subject to the policy guidance and coordination of its parent company CIR – Compagnie Industriali Riunite S.p.A..

1. CONTENT AND FORMAT OF THE CONSOLIDATED FINANCIAL STATEMENTS

These financial statements have been prepared in accordance with Consob resolution 11971/1999 and subsequent amendments, in particular those introduced by resolutions no. 14990 of April 14, 2005 and no. 15519 of July 27, 2006, and include the consolidated accounting schedules and explanatory and supplementary notes of the Group, prepared according to the IFRS international accounting standards issued by the IASB (International Accounting Standards Board) and endorsed by the European Union. IFRS means all the “International Financial Reporting Standards” (IFRS), all the “International Accounting Standards” (IAS) and all the interpretations of the “International Financial Reporting Interpretations Committee” (IFRS IC, formerly IFRIC), previously named the “Standing Interpretations Committee” (SIC).It is specifically reported that the IFRS have been applied in a consistent manner to all the periods presented in this document.

The financial statements have been prepared on the basis of the conventional historical cost principle, except for the measurement of certain financial assets and liabilities, including derivatives instruments, where the application of the fair value principle is mandatory.

The financial statements used for consolidation purposes are those prepared by the Boards of Directors for approval by the shareholders of the individual companies. Said financial statements have been reclassified and adjusted to comply with International Financial Reporting Standards (IAS/IFRS), and Group accounting policies.

The Consolidated Financial Statements as of December 31, 2015 were approved by the Board of Directors of the Holding Company Sogefi S.p.A. on February 29, 2016.


1.1 Format of the consolidated financial statements

As regards to the format of the consolidated financial statements, the Company has opted to present the following types of accounting statements:

Consolidated Statement of Financial PositionThe Consolidated Statement of Financial Position is presented in two sections, showing assets on one side and liabilities and equity on the other. Assets and liabilities are in turn shown in the consolidated financial statements on the basis of their classification as current or non-current.

An asset/liability is classified as current when it satisfies one of the following criteria:

- it is expected to be realised/settled or it is expected to be sold or consumed in the normal cycle of operations, or- it is held primarily for the purpose of trading, or- it is expected to be realised/settled within twelve months after the reporting period.

If none of the above conditions are met, the assets/liabilities are classified as non-current.

Finally, liabilities are classified as current when the entity does not have unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Consolidated Income Statement Costs shown in the Consolidated Income Statement are aggregated by function, while also making a distinction between fixed and variable costs.

The Income Statement also provides the following intermediate aggregates in order to give a clearer understanding of the typical results of normal manufacturing activities, the financial side of the business and the impact of taxation:

- Contribution margin;- EBIT (earnings before interest and tax);- Result before taxes and non-controlling interests;- Net result before non-controlling interests;- Group net result.

Consolidated Statement of Other Comprehensive Income The Consolidated Statement of Other Comprehensive Income includes all the changes occurring in Other comprehensive income of the year, generated by transactions other than those conducted with shareholders and in compliance with specific IAS/IFRS accounting principles. The Group has chosen to present these changes in a separate table to the Consolidated Income Statement.The changes in Other comprehensive income are shown before the related tax effect with the aggregate amount of the income taxes on said variations being recognised in a single item. Those components that may or may not be reclassified to Consolidated Income Statement at a later time are listed separately in the table.


Consolidated Cash Flow Statement A Consolidated Cash Flow Statement split by area of formation of the various types of cash flow as indicated in international accounting standards is included. The Consolidated Cash Flow Statement has been prepared using the indirect method.Please note that in this cash flow statement, the change in working capital may not coincide with the difference between the opening and closing statement of financial position figures because of exchange differences: in fact, cash flows generated are converted using the average exchange rate for the year, while the difference between the opening and closing consolidated statement of financial position figures in Euro may be influenced by changes in exchange rates at the beginning and end of the year, which have little to do with the generation or absorption of cash flow within working capital. The exchange differences generated by opening and closing statements of financial position are booked to “Exchange differences”.

Consolidated Statement of Changes in Equity A Consolidated Statement of Changes in Equity is included as required by international accounting standards, showing separately the net result for the period and any change that was not charged through the Income Statement, but directly to the consolidated Other comprehensive income on the basis of specific IAS/IFRS, as well as transactions with shareholders in their role as shareholders.

1.2 Content of the consolidated financial statements

The Consolidated Financial Statements as of December 31, 2015 include the Holding Company Sogefi S.p.A. and the directly or indirectly controlled subsidiaries. Section H of these notes gives a list of the companies included in the scope of consolidation and the percentages held.

These financial statements are presented in Euro and all figures are rounded up or down to the nearest thousand Euro, unless otherwise indicated.The consolidated financial statements (prepared on a line-by-line basis) include the financial statements of Sogefi S.p.A., the Holding Company, and of all the Italian and foreign companies under its direct or indirect control, which is normally identified as control over the majority of the voting rights.

During the year the following changes occurred in the scope of consolidation:- subsidiary Allevard Rejna Autosuspensions S.A. increased its percentage of ownership

in subsidiary Allevard IAI Suspensions Pvt Ltd. from 73.91% to 74.23% through a share capital increase not subscribed by non-controlling interest shareholders that ledto an amount of Euro 7 thousand being reclassified between non-controlling interests and Group's shareholders' equity;

- subsidiary Allevard Rejna Autosuspensions S.A. increased its percentage of ownership in subsidiary S. ARA Composite S.A.S. from 94.12% to 95% through a share capital increase not subscribed by non-controlling interest shareholders that led to an amount of Euro 97 thousand being reclassified between non-controlling interests and Group's shareholders' equity;


Furthermore, in the year 2015 the merger process between Indian companies Sogefi M.N.R. Filtration India Pvt Ltd and Systèmes Moteurs Pvt Ltd was completed (said process did not have any impact on the Group's consolidated financial statements).Please note that the non-controlling shareholders of subsidiary Sogefi-M.N.R. Engine Systems India Pvt Ltd – the post-merger company – hold a put option on 30% of the share capital (they previously held a put option on 40% of the share capital of subsidiary Sogefi M.N.R. Filtration India Pvt Ltd). As of December 31, 2015, the fair value of the liability associated with the exercise price of such put option amounted to Euro 6,882thousand (Euro 6,765 thousand as of December 31, 2014)

No further changes were made to the scope of consolidation during the period.

1.3 Group composition

As required by IFRS 12, Group composition as at December 31, 2015 and December 31, 2014 was as follows:


December 31, 2015 December 31, 2014Air&Cooling Canada 1 1

France 1 1Messico (*) 1 1Romania 1 1Cina (**) 2 2Lussemburgo 1 1USA 1 1India - 1Hong Kong 1 1

Filtration Italy (***) 1 1France 1 1Great Britain 1 1Spain 1 1Slovenia 1 1USA 1 1Brazil 1 1Argentina 1 1

Suspensions France 2 2Great Britain 2 2Germany 2 2The Netherlands 1 1Brazil 1 1Argentina 1 1

Sofegi Purchasing S.A.S. France 1 1TOTAL 27 28

(*) This subsidiary works also for Suspensions Business Unit.(**) These subsidiaries work also for Filtration and Suspensions Business Units.(***) This subsidiary works also for Suspensions Business Unit.

Business Unit RegionWholly-owned subsidiaries

December 31, 2015 December 31, 2014Air&Cooling China 1 1Filtration India (****) 1 1Suspensions France 1 1

Spain 1 1China 1 1India 1 1

TOTAL 6 6

(****) This subsidiary works also for Air&Cooling Business Unit.

Business Unit RegionNon-wholly-owned subsidiaries

As mentioned above, in the year 2015 the merger process between Indian companies Sogefi M.N.R. Filtration India Pvt Ltd and Systèmes Moteurs Pvt Ltd was completed.


2. CONSOLIDATION PRINCIPLES AND ACCOUNTING POLICIES

The main accounting principles and standards applied in preparation of the consolidated financial statements and of the Group aggregate financial disclosures are set forth below.

These Consolidated Financial Statements have been drawn on the going concern assumption, as the Directors have verified the inexistence of financial, performance or other indicators that could give rise to doubts as to the Group’s ability to meet its obligations in the foreseeable future. The risks and uncertainties relating to the business are described in the dedicated sections in the Directors' Report. A description of how the Group manages financial risks, including liquidity and capital risk, is provided in note 39.

2.1 Consolidation principles

The financial statements as of December 31, 2015 of the companies included in the scope of consolidation, prepared in accordance with Group accounting policies with reference to IFRS, have been used for consolidation purposes.The scope of consolidation includes subsidiaries, joint ventures and associates.

All the companies over which the Group has the direct or indirect power to determine the relevant activities (i.e., the financial and operating policies) are considered subsidiaries. Specifically, 50% owned company Iberica de Suspensiones S.L. is treated as a subsidiary because the Group controls the majority of votes of the Board of Directors, which is the corporate body tasked with deciding on the entity's relevant activities.The assets, liabilities, costs and revenues of the individual consolidated companies are fully consolidated on a line-by-line basis, regardless of the percentage owned, while the carrying value of consolidated investments held by the Holding Company and other consolidated companies is eliminated against the related share of equity.

All intercompany balances and transactions, including unrealised profits deriving from transactions between consolidated companies, are eliminated. Unrealised losses are eliminated, except when a loss represents an impairment indicator to be recognised in the Income Statement.

The financial statements of the subsidiaries are drawn up using the currency of the primary economic environment in which they operate (“functional currency”). The consolidated financial statements are presented in Euro, the functional currency of the Holding Company and hence the currency of presentation of the consolidated financial statements of the Sogefi Group.The procedures for translation of the financial statements expressed in foreign currency other than the Euro are the following:- the items of the Consolidated Statement of Financial Position are translated into

Euro at the year-end exchange rates; - the Income Statement items are translated into Euro using the year’s average

exchange rates;


- differences arising on translation of opening equity at year-end exchange rates are booked to the translation reserve, together with any difference between the net result of income statement and statement of financial position;

- whenever a subsidiary with a different functional currency from the Euro is disposed of, any exchange differences included in Other comprehensive income are charged to the Income Statement;

- dividends paid by companies that use functional currencies other than the Euro are converted at the average exchange rate of the previous year for the company that pays the dividend and at the current exchange rate for the company that receives the dividend; exchange differences between the two amounts are booked to the translation reserve.

The following exchange rates have been used for translation purposes:

Average 12.31 Average 12.31US dollar 1.1091 1.0887 1.3267 1.2141Pound sterling 0.7257 0.7340 0.8061 0.7789Brazilian real 3.6390 4.3116 3.1198 3.2207Argentine peso 10.2114 14.0964 10.7596 10.2754Chinese renminbi 6.9691 7.0607 8.1733 7.5358Indian rupee 71.1238 72.0461 80.9717 76.7460New romanian Leu 4.4450 4.5241 4.4439 4.4829Canadian dollar 1.4158 1.5116 1.4657 1.4063Mexican peso 17.5623 18.9143 17.6523 17.8667Hong Kong dollar 8.5977 8.4374 10.2891 9.4171

2015 2014

A joint venture is an entity for which strategic financial and operating decisions concerning the relevant activities of the company are made with the unanimous approval of the controlling parties.An associate is an entity in which the Group is able to exert a significant influence, but without being able to control its relevant activities.Investments in joint ventures and associates are consolidated applying the equity method, which means that the results of operations of associates and any changes in Other comprehensive income of the joint ventures and associates are reflected in the consolidated Income Statement and in Consolidated Statement of Other Comprehensive Income. If the carrying value exceeds the recoverable amount, the carrying value of the investment in the joint venture or in the associate is adjusted by booking the related loss to the Income Statement. Company AFICO FILTERS S.A.E. (22.62% stake) was not classified as associate due to the lack of Group’s members in the management bodies of the company (which means the Group does not exert significant influence on the company).


2.2 Business combinations

Business combinations are recognised under the acquisition method. According to this method, the consideration transferred to a business combination is measured at fair value calculated as the aggregate of the acquisition-date fair value of the assets transferred and liabilities assumed by the Company and of the equity instruments issued in exchange for the control of the acquired entity. On the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their acquisition-date fair value; the following items represent exception to the above and are valued according to their reference principle:o deferred tax assets and liabilities;o assets and liabilities relating to employee benefits;o liabilities or equity instruments relating to share-based payments of the acquired

entity or share-based payments relating to the Group, issued as a replacement of contracts of the acquired entity;

o assets held for sale and discontinued assets and liabilities.Goodwill is measured as the surplus between the sum of the consideration transferred to the business combination, the value of non-controlling interests and the fair value ofpreviously-held equity interest in the acquiree with respect to the fair value of the net assets transferred and liabilities assumed as at the acquisition-date. If the fair value of the net assets transferred and liabilities assumed as at the acquisition-date exceeds the sum of the consideration transferred, the value of non-controlling interests and the fair value of the previously-held equity interest in the acquiree, said surplus is immediately booked to the Income Statement as gain resulting from said transaction.The share of non-controlling interests as at the acquisition-date may be measured at fair value or as a proportion of net assets value in the acquiree. The measurement method adopted is decided on a transaction-by-transaction basis.

2.3 Accounting policies

The following accounting policies have been applied in the financial statements as of December 31, 2015.

Cash and cash equivalents

Cash and cash equivalents are those held to meet short-term cash needs, rather than for investment or other purposes. For an investment to be considered as cash or cash equivalent, it must be able to be readily converted into a known amount of cash and must be subject to an insignificant risk of change in value.

Inventories

Inventories are stated at the lower of purchase or manufacturing cost, determined on a weighted average cost basis, and realisable value based on market trends, net of variable selling costs.Manufacturing cost includes raw materials and all direct or indirect production-related expenses. Financial expenses are excluded. Obsolete and slow-moving inventories are written down to their utilisable or realisable value.


Receivables included in current assets

Receivables are initially recognised at fair value of the consideration to be received,which usually corresponds to the nominal value shown on the invoice, adjusted (if necessary) to their estimated realisable value by making provision for doubtful accounts. Subsequently, receivables are measured at amortised cost, which generally correspondsto their nominal value.Receivables assigned through without-recourse factoring transactions after which the related risks and benefits are definitively transferred to the assignee are derecognised from the statement of financial position at the time of transfer. Receivables assigned through recourse factoring transactions are not derecognised.

Tangible fixed assets

Tangible fixed assets mainly relate to industrial sites. Assets are shown at historical cost, net of accumulated depreciation and accumulated impairment losses.Cost includes related charges, together with the portion of direct and indirect expenses reasonably attributable to individual assets.

Tangible fixed assets are depreciated each month on a straight-line basis using rates that reflect the technical and economic remaining lives of the related assets.

The depreciable value is the cost of an asset less its residual value, where the residual value of an asset is the estimated value that the entity could receive currently from its disposal, if the asset was already in the condition expected at the end of its useful lifenet of estimated disposal costs.

Depreciation is calculated from the month that the asset becomes available for use, or when it is potentially able to provide the economic benefits expected of it.

The annual average depriciation rates applied are as follows:

%Land n.a.Industrial buildings and light constructions 2.5-12.5Plant and machinery 7-14Industrial and commercial equipment 10-25Other assets 10-33.3Assets under construction n.a.

Land, assets under construction and payments on account are not depreciated.

Ordinary maintenance costs are charged to the Income Statement. Maintenance costs that increase the value, functions or useful life of fixed assets are recorded directly as the increase in the value of the assets to which they refer and depreciated over their residual useful lives.


Gains or losses on the disposal of assets are calculated as the difference between the sales proceeds and the net book value of the asset and are charged to the Income Statement for the period.

Grants are shown in the Statement of Financial Position as an adjustment of the book value of the asset concerned. Grants are then recognised as income over the useful life of the asset by effectively reducing the depreciation charge each year.

Assets under lease There are two types of leases: finance leases and operating leases. A lease is considered a finance lease when it transfers substantially all risks and benefits incidental to ownership of the asset to the lessee.As envisaged in IAS 17, a lease is considered a finance lease when the following elements are present, either individually or in combination: - the contract transfers ownership of the asset to the lessee at the end of the lease term;- the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable such that it is reasonably certain, at the inception of the lease, that it will be exercised;- the lease term is for the major part of the useful life of the asset, even if title is not transferred;- at the inception of the lease, the present value of the minimum lease payments is equal to at least the fair value of the asset being leased;- the assets being leased are of such a specialised nature that only the lessee is able to use them without making major modifications.

Assets available to Group companies under contracts that fall into the category of finance leases are accounted for as tangible fixed assets at their fair value at the date of purchase or, if lower, at the present value of the minimum payments due under the lease; the corresponding liabilities to the lessor are shown in the Statement of Financial Position as financial debts. The assets are depreciated over their estimated useful lives.Lease payments are split between the principal portion, which is booked as a reduction of financial debts, and interest. Financial expenses are charged directly to the Income Statement for the period.Payments under operating lease contracts, on the other hand, are charged to the Income Statement on a straight-line basis over the life of the contract.

Intangible assets

An intangible asset is only recognised if it is identifiable and verifiable, it is probable that it will generate economic benefits in the future and its cost can be measured reliably. Intangible assets with a finite life are valued at purchase or production cost, net of amortisation and accumulated impairment losses.

The annual average amortisation rates applied are as follows:


%Development costs 20-33.3Industrial patents and intellectual property rights, concessions, licences, trademarks 10-33.3Customer relation 5Trade name 5Software 20-50Other 20-33.3Goodwill n.a.Assets under construction n.a.

Amortisation is based on the asset’s estimated useful life and begins when it is available for use.

Research and development expensesResearch expenses are charged to the income statement as incurred in accordance with IAS 38.Development expenses relating to specific projects are capitalised when their future benefit is considered reasonably certain by virtue of a customer’s commitment; they are then amortised over the entire period of future profits expected to be earned by the project in question.Costs incurred in developing the range of aftermarket products are capitalised from the time a certain product is recognised to be missing from the product portfolio. Its future benefit is considered reasonably certain because the new product will be added to the product catalogue and made available to customers.The capitalised value of the various projects is reviewed annually - or more frequently if there are particular reasons for doing so - analysing its recoverable amount to assess ifthere have been any impairment losses.

Trademarks and licencesTrademarks and licences are valued at cost, less amortisation and accumulated impairment losses. The cost is amortised over the shorter of the contract term and the finite useful life of the asset.

Customer RelationsCustomer relations represent the value of the Systèmes Moteurs Group's customer portfolio at the acquisition date as determined during the Purchase Price Allocation process.

Brand nameBrand name represents the value of the "Systèmes Moteurs" brand name at the acquisition date as determined during the Purchase Price Allocation process.

SoftwareThe costs of software licences, including related charges, are capitalised and shown in the financial statements net of amortisation and any accumulated impairment losses.It should be pointed out that a multi-year project has been launched in 2011 toimplement a new integrated IT system across the Group. Relating costs are capitalised by Holding Company Sogefi S.p.A., that will licence the intellectual property rights on the IT system for use by the subsidiaries involved in the implementation process


receiving the payment of royalty fees. The useful life of the fixed asset is estimated at 10 years and amortisation begins when implementation at each individual company is completed.

GoodwillGoodwill resulting from business combinations is initially recognised at cost as at the acquisition-date, as detailed in the paragraph above entitled “Business combinations”.Goodwill is not amortised but is tested annually for impairment, or more frequently if specific events or changed circumstances indicate a potential loss in value. Unlike other intangible assets, reversal of an impairment loss is not allowed for goodwill.For impairment test purposes, goodwill was allocated to each of the Cash Generating Units (CGU) due to benefit from the acquisition.The Sogefi Group currently encompasses five CGUs: Filtration (previously named “Engine Systems – Fluid Filters”), Air&Cooling (previously named “Engine Systems –

Air Intake and Cooling”), Car Suspension, Industrial Vehicles Suspension and Precision Springs. The goodwill currently on the books only concerns the Filtration, Air&Cooling CGUs and the Car Suspension CGU.

Intangible assets with an indefinite useful lifeIntangible assets with an indefinite useful life are not amortised, but are tested annually for impairment, or more frequently if there is an indication that the asset may have suffered a loss in value. As of December 31, 2015, the Group has no intangible assets with an indefinite useful life.

Impairment losses of tangible and intangible fixed assets

If there are indications of possible losses in value, tangible and intangible fixed assets are subjected to impairment test, estimating the asset's recoverable amount and comparing it with its net book value. If the recoverable amount is less than the book value, the latter is reduced accordingly. This reduction constitutes an impairment loss, which is booked to the income statement.For goodwill and any other intangible fixed assets with indefinite useful life, an impairment test is carried out at least once a year.With the exception of goodwill, if a previous writedown is no longer justified, a new recoverable amount is estimated, providing it is not higher than what the carrying value would have been if the writedown had never been made. This reversal is also booked to the Income Statement.

Equity investments in other companies and other securities

In accordance with IAS 39, equity investments in entities other than subsidiaries, joint ventures and associates are classified as financial assets available for sale which are measured at fair value, except in situations where the market price or fair value cannot be reliably determined. In this case the cost method is used.Gains and losses deriving from fair value adjustments are booked to a specific itemunder Other comprehensive income. In the case of objective evidence that an asset


suffered an impairment loss or it is sold, the gains and losses previously recognised under Other Comprehensive Income are reclassified to the Income Statement.For a more complete discussion of the principles regarding financial assets, reference should be made to the note specifically prepared on this matter (paragraph 3 "Financial assets").

Non-current assets held for sale

Under IFRS 5 "Non-current assets held for sale and discontinued operations", providing the relevant requirements are met, non-current assets whose book value will be recovered principally by selling them rather than by using them on a continuous basis, have to be classified as being held for sale and valued at the lower of book value or fair value net of any selling costs. From the date they are classified as non-current assets held for sale, their depreciation is suspended.

Loans

Loans are initially recognised at cost, represented by the fair value received, net of related loan origination charges.After initial recognition, loans are measured at amortised cost by applying the effective interest rate method.The amortised cost is calculated taking account of issuing costs and any discount or premium envisaged at the time of settlement.

Derivatives

A derivative is understood as being any contract of a financial nature with the following characteristics:

1. its value changes in relation to changes in an interest rate, the price of a financial instrument, the price of a commodity, the exchange rate of a foreign currency, a price or interest rate index, a credit rating or any other pre-established underlying variable;2. it does not require an initial net investment or, if required, this is less than what would be requested for other types of contract likely to provide a similar reaction to changes in market factors;3. it will be settled at some future date.

For accounting purposes, a derivative’s treatment depends on whether it is speculative in nature or whether it can be considered an hedging instrument.All derivatives are initially recognised in the Statement of Financial Position at cost as this represents their fair value. Subsequently, all derivatives are measured at fair value.

Any changes in the fair value of derivatives that are not designated for hedge accounting are booked to the Income Statement (under “Financial expenses (income), net”).

Derivatives that can be booked under the hedge accounting are classified as:


- fair value hedges if they are meant to cover the risk of changes in the market value of the underlying assets or liabilities; - cash flow hedges if they are taken out to hedge the risk of fluctuations in the cash flows deriving from an existing asset or liability, or from a future transaction that is highly probable.

For derivatives classified as fair value hedges, the gains and losses that arise on determining their fair value and the gains and losses that derive from adjusting the underlying hedged items to their fair value are booked to the Income Statement.

For those classified as cash flow hedges, used for example, to hedge medium/long-term loans at floating rates, gains and losses that arise from their valuation at fair value are booked directly to Other comprehensive income for the part that effectively hedges the risk for which they were taken out. The portion booked to Other comprehensive income will be reclassified to the Income Statement (under the item “Financial expenses (income), net” in the period) when the hedged assets and liabilities impact the costs and revenues of the period.

When an instrument is determined to be an ineffective hedge, the hedging relationship is discontinued and the following amounts are booked to Income Statement (under the item “Financial expenses (income), net”):- the change in fair value of the derivative since the date the hedge last proved

effective is immediately recognised in the Income Statement;- the reserve previously booked to Other Comprehensive Income is recognised in the

Income Statement over the same period of time as the differentials relating to the underlying item hedged previously (if the hedged item is still booked to the Consolidated Statement of Financial Position of the Group).

Note that the Group has adopted a specific procedure for managing financial instruments as part of an overall risk management policy.

Trade and other payables

Payables are initially recognised at fair value of the consideration to be paid and subsequently at amortised cost, which generally corresponds to their nominal value.

Provisions for risks and charges

Provisions for risks and charges are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resource embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.On the other hand, no provision is made in the case of risks for which there is only a possibility that a liability may arise. In this case, the risk is disclosed in the notes on commitments and risks without making any provision.Provisions relating to corporate reorganizations are only set aside once they have been approved and raised a valid expectation to the parties involved.


Post-retirement and similar employee benefits

Group employees have defined-benefit and/or defined-contribution pension plans, depending on the conditions and local practices of the countries in which the group operates.The Group’s responsibility is to finance the pension funds for the defined-benefit plans (including the employment termination indemnities currently applicable in Italy) and the annual cost recognised in the Income Statement are calculated on the basis of actuarial valuations that use the projected unit credit method. The liability relating to benefits to be recognised on termination of employment recorded in the Consolidated Statement of Financial Position represents the present value of the defined-benefit obligation, less the fair value of the plan assets. Any net assets determined are recognised at the lowest of their value and the present value of available repayments and reductions of future contribution to the plan.Pursuant to the amendment to IAS 19 “Employee Benefits” effective as January 1, 2013, the Group recognises actuarial gains and losses and books them to “Other comprehensive income” immediately, so that the full net amount of the provisions for the defined benefits (net of plan assets) is recognised in the Consolidated Statement of Financial Position. The amendment further requires any changes in the defined benefit provision and plan assets over the previous period to be subdivided into three components: the cost components of work performed during the reporting period mustbe recognised in the Income Statement as service costs; net interest costs calculated by applying the appropriate discount rate to the opening balance of defined benefit provision net of assets must be booked to Income Statement as net financial expenses and the actuarial gains and losses resulting from the remeasurement of assets and liabilities must be booked to “Other comprehensive income”. In addition, the return on assets included in net interest costs must be calculated using the discount rate applicable to liabilities and no longer the expected return on the assets. The difference between actual and expected return on plan assets is booked to “Other comprehensive income”.In the event of an amendment to the plan that changes the benefits relating to past service or in the event of the application of a new plan relating to past service, the costs relating to past service are booked to the Income Statement (under service costs). In the event of an amendment to the plan that significantly reduces the number of employees involved in the plan or that changes the clauses of the plan in such a way that a significant part of future service due to employees will no longer accrue the same benefits or will accrue them but to a lesser extent, the profit or loss relating to said reduction is immediately booked to the Income Statement (under service costs).All of the costs and income resulting from the measurement of funds for pension plans are booked to the Income Statement by functional area of destination, with the exception of the financial component relating to non-financed defined-benefit plans, which is included in Financial expenses.The costs relating to defined-contribution plans are booked to the Income Statement when incurred.


Other long-term benefitsOther long-term employee benefits relate to the French subsidiaries and include “Jubilee or other long-service benefits” that are not expected to be paid fully within the twelve months following the end of the reporting period during which the employee hasrendered service for those benefits.The valuation of other long-term benefits usually does not present the same degree of uncertainty as post-employment benefits. This is why IAS 19 requires a simplified method of accounting for such benefits. Unlike the accounting method required for post-employment benefits, this method (which requires actuarial valuation) does not require discounting effects to be taken to Other comprehensive income.

Phantom stock optionsWith regard to phantom stock option plans, as envisaged by IFRS 2, in the section regarding “Cash-settled share-based payment transactions”, the fair value of the plan at the date of the financial statements is remeasured, with any changes in fair value recognised in the Income Statement with a corresponding entry to a provision.

Stock-based incentive plans With regard to “Stock-based incentive plans“ (Stock options and Stock grants), as envisaged by IFRS 2, the Group calculates the fair value of the option at the granting date, booking it to the Income Statement as a cost over the vesting period of the benefit. The ad hoc equity reserve in the Consolidated Statement of Financial Position has been increased. This imputed cost is measured by specialists with the help of suitable economic and actuarial models.

Deferred taxation

Deferred taxes are calculated on the taxable/deductible temporary differences between the book value of assets and liabilities and their tax bases, and classified under non-current assets and liabilities.Deferred tax assets are accounted for only to the extent that it is probable that sufficient taxable profits will be available in the future against which they can be utilised.The carrying amount of the deferred tax assets shown in the financial statements is subject to an annual review.Deferred tax assets and liabilities are calculated at the tax rates expected to apply in the period when the differences reverse under the law of the countries in which the Group operates, considering current rates and those enacted or substantially enacted at the end of the reporting period.Deferred tax liabilities are calculated on taxable temporary differences relating to equity investments in subsidiaries, associates and joint ventures, except where the Company can control the reversal of such temporary differences and it is probable that they will not reverse in the foreseeable future.Current and deferred taxes are recognised in the income statement, except for those relating to items directly charged or credited to Other comprehensive income or other equity items, in which case tax effect is recognised directly under Other comprehensive income or equity.


Participation in CIR’s group tax filing system (applicable to Italian companies)

Each company jointing to the group Italian tax filing system transfers its tax profit or loss to the parent company. The parent company recognises a credit corresponding to the IRES (Italian tax on company income) that companies have to be paid (debit for the transferor company). On the contrary, for companies that booked tax losses, the parent company recognises a debt corresponding to the IRES for the part of loss actually offset at group level (credit for the transferer company).In connection with the Group tax filing system, those companies that record non-deductible net financial expenses may use the excess tax benefits available for offset of other Group companies (thus making such expenses deductible) for a consideration. Such consideration, in an amount proportionate to the resulting tax benefit and applicable to excess tax benefits arising in Italy only, has been paid to the parent company CIR and is treated as expense for those companies that obtain the excess tax benefit and as revenue for those that transfer it.

Treasury shares

Treasury shares are deducted from equity. The original cost of treasury shares and the profit/loss resulting from their subsequent sales are recognised as changes in equity.

Revenues recognition

Revenues from the sale of products are recognised at the time ownership passes (time of risks and benefits transfer), which is generally upon shipment to the customer. They are shown net of returns, discounts and allowance.The proceeds from the sale of tooling to customers can be recognised as follows: a) the full amount is recognised at the time risks and benefits of the tooling are transferred (if said transfer is deferred, margin is booked to “Other current liabilities”);b) the amount is recognised by means of an increase of the sales price of the products manufactured using the relevant tooling, throughout a variable time frame depending on the number of products sold (in this case the unrealised sales price for the tooling is booked to “Inventory – Contract work in progress and advances”).Revenues from services rendered are recognised at the time the services are provided.

Income Statement Overview

Variable cost of salesThis represents the cost of goods sold. It includes the cost of raw and ancillary materials and goods for resale, as well as variable manufacturing and distribution costs, including the direct labour cost of production.

Manufacturing and R&D overheads This category includes manufacturing overheads such as indirect labour cost of production, maintenance costs, consumable materials, building rents, and industrial equipment involved in production.


Also included are all R&D overheads, net of any development costs that are capitalised because of their future benefits and excluding amortisation which is booked to a separate item in the Consolidated Income Statement.

Distribution and sales fixed expenses These are costs that are essentially insensitive to changes in sales volumes, relating to personnel, promotion and advertising, external warehousing, rentals and other sales and distribution activities. This category, therefore, includes all fixed costs identified as being incurred after finished products have been stocked in the warehouse and directly related to their sale and distribution.

Administrative and general expensesThis category includes fixed labour costs, telephone expenses, legal and tax consulting fees, rents and rentals, cleaning, security and other general expenses.

Restructuring costs and other non-operating expenses/income These are figures that do not relate to the Group's normal business activities or refer to non-recurring activities and are expressly disclosed in the notes if they are of a significant amount.

Operating grants

These are credited to the Consolidated Income Statement when there is a reasonable certainty that the company will meet the conditions for obtaining the grant and that the grants will therefore be received.

Dividends

Dividend income is recorded when the right to receive it arises. This is normally at the time of the shareholders' resolution that approves distribution of the dividends.

Dividends to be distributed are recognised as a payable to shareholders immediately after they have been approved.

Current taxes

Current taxes are booked on the basis of a realistic estimate of taxable income calculatedaccording to current tax legislation in the country concerned, taking account of any exemptions and tax credits that may be due.

Earnings per share (EPS)

Basic EPS is calculated by dividing net result for the period attributable to the ordinary shareholders of the Holding Company by the weighted average number of ordinary shares outstanding during the period, net of treasury shares.

Diluted EPS is obtained by adjusting the weighted average number of shares outstandingto take account of all potential ordinary shares that could have a dilutive effect.


Translation of foreign currency items

Functional currency Group companies prepare their financial statements in the local currency of the country concerned.The functional currency of the Parent is the Euro and this is the presentation currency in which the consolidated financial statements are prepared and published.

Accounting for foreign currency transactions Foreign currency transactions are initially translated at the exchange rate ruling on the transaction date. At the end of the reporting period, monetary assets and liabilities expressed in foreign currency are retranslated at the period-end exchange rate. Non-monetary foreign currency items valued at historical cost are translated at the exchange rate ruling on the transaction date. Non-monetary items carried at fair value are translated at the exchange rate ruling on the date this value was determined.

Critical estimates and assumptions

Various estimates and assumptions regarding the future have to be made when preparing financial statements. They are the best estimates possible at the end of the reporting period. Given their nature, they could lead to a material difference in statement of financial position items in future years. The main items affected by these estimates are as follows:- goodwill (Euro 126.6 million) – impairment test: for the purpose of determining the

value in use of the Cash Generating Units, the Group took into account the trends expected for 2016 as determined based on the budget (approved by the Board of Directors on January 19, 2016 and adjusted to account for the depreciation of the Brazilian Real and the Argentine Peso occurred at the end of 2015) and the forecasts included in the 2017-2019 projection update for the following years (adjusted to eliminate any estimated benefits from future projects and reorganisations) approved by the Board of Directors on February 29, 2016. Projections were prepared by management and approved by the Board of Directors for the sole purpose of impairment testing. Budget and projections were prepared taking into account forecasts for the automotive segment made by major sources in the industry and based on a conservative approach. It was necessary to use this method because the Group did not have a strategic plan at the time. It will be approved in the next few months once the new top management team is appointed. The impairment test, based on such forecasts, does not indicate a need for impairment;

- pension plans (Euro 42.6 million): actuaries who offer their consulting services to the Group use different statistic assumptions in order to anticipate future events for the purpose of estimating pension plan expenses, liabilities and assets. Such assumptions concern discount rate, future wage inflation rates, mortality and turnover rates;

- recoverability of deferred tax assets on tax losses (Euro 22.6 million): as of December 31, 2015, deferred tax assets on tax losses incurred during previous years were accounted for to the extent that it is probable that taxable income will be


available in the future against which they can be utilised. Such probability is also determined based on the fact that such losses have originated mainly under extraordinary circumstances that are unlikely to occur again in the future and that the same could be recovered throughout an unlimited or long-term time frame;

- derivatives (Euro 14,1 million in assets and Euro 11,9 million in liabilities): the estimate of the fair value of derivatives (relating to interest and exchange rates) and the effectiveness test on derivatives held for hedge accounting were performed with the aid of external consultants based on valuation models commonly used in the industry, in line with the requirements of IFRS 13 (calculation of DVA - debit valuation adjustment);

- embedded derivative - conversion option (Euro 9.1 million): the fair value of the conversion option in the convertible bond at the time of the irrevocable waiver by the Holding Company Sogefi S.p.A. of such right (January 28, 2015) was measured using a mathematical financial (binomial) model and such valuation parameters as the market price of Sogefi shares, the issue price of newly issued shares, risk-free rate and the volatility of the Sogefi stock;

- provision for product warranties (Euro 11.8 million)/Other non-current receivables (Euro 23.4 million). With regard to provision for product warranties, there are claims in progress by two customers relating to a defective component supplied by subsidiary Systèmes Moteurs S.A.S. starting from 2010 before and partly after the subsidiary was acquired by the Sogefi Group. The Company believes that the defect was caused by a thermostat manufactured by a supplier of Systèmes Moteurs S.A.S. and in 2012 filed a law suit against that supplier at the French courts seeking indemnity for any damages it might have to pay to its customers.

The court appointed a technical expert to write an expert witness report (expertise)in June 2012. Merit proceedings were suspended pending submission of the expert witness report. The expert established that the defect was caused by the thermostat manufactured by the supplier of Systèmes Moteurs S.A.S..In 2014, the two customers joined the expertise proceedings and petitioned for their damages to be determined in the expert witness report. Their petition was accepted and the expert's assignment was extended accordingly.Previously, both customers had requested an out-of-court settlement for damages. To date, neither customer is involved in any other proceedings.

The customers claimed Euro 122.8 million in damages, mostly relating to past and future campaigns and Euro 65.9 million for damage to reputation and loss of future income.Based on existing proceedings, the Company and its legal counsel deem that there is only a remote possibility that a liability will arise from the latter claim.

With regard to the first amount claimed, each claim was broken down by period of production to reflect the associated production costs. According to the Company's estimates, Euro 60.4 million out of the 122.8 million claimed relate to the period before Systèmes Moteurs S.A.S was purchased by the Sogefi Group, and Euro 26,6 million relate to the 7 following months.


The Company has already paid Euro 3 million by issuing debit notes in favour of customers. In addition, the Company paid Euro 18.0 million to the two customers in the first half of 2015. Systèmes Moteurs S.A.S. paid out these amounts to the above mentioned customers on a provisional basis under standstill agreements, without any admission of liability. Such amounts will be adjusted or partly refunded as required when the Court decides on the merits of the case.

As of June 30, 2015, according to the general prudence principles, the Company decided to account for an additional provision of Euro 11.8 million for product warranties. This amount was reviewed in light of the latest developments at the end of 2015. The Company believes that this provision is still adequate.

With regard to the indemnities owed by the seller of Systèmes Moteurs S.A.S. shares, it is worthwhile pointing out that the Sogefi Group entered an indemnification asset totalling Euro 23.4 million in the Consolidated Financial Statements in 2011, because the seller Dayco Europe S.r.l. had provided contractual guarantees relating to defect liability claims existing at the time of the acquisition, including those noted above.As of December 31, 2015, such indemnification asset has been valued according to IFRS 3.57, and is still believed to be recoverable based on the contractual guarantees given by the seller and the considerations outlined above.The Sogefi Group has not booked any such assets after 2011.Sogefi S.p.A. initiated international arbitration proceedings against the seller of Systèmes Moteurs S.A.S.' shares to recover the costs incurred after the Systèmes Moteurs S.A.S. acquisition date, as provided for by the acquisition contract. An arbitration award is expected during the first half of 2016.

It should be noted that these are complex proceedings that involve passing judgement on technical, juridical and commercial matters, and present uncertainties connected with the outcome of the proceedings before the French courts and the arbitration award. Estimates concerning risks provision and the recovery of booked assets are based on the best information available at the time of preparing the financial statements. They are subject to change as events evolve.


2.4 Adoption of new accounting standards

IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLICABLE SINCE JANUARY 1, 2015

The following IFRS accounting standards, amendments and interpretations were first adopted by the Group starting January 1, 2015:

� On May 20, 2013, IFRIC interpretation 21 – Levies was issued. The interpretation clarifies when a liability for levies (other than income taxes)imposed by government agencies should be recognised. This standard addresses both levies that are accounted for in accordance with IAS 37 - Provisions, Contingent Liabilities and Contingent Assets, and those for which the settlement timing and amount are certain. The interpretation applies retrospectively to reporting periods beginning on or after June 17, 2014. The adoption of this new interpretation had no impact on the consolidated financial statements of the Group.

� On December 12, 2013, the IASB issued document “Annual Improvements to IFRSs: 2011-2013 Cycle” implementing the amendments to some principles within the yearly improvement process (including IFRS 3 BusinessCombinations – Scope exception for joint ventures, IFRS 13 Fair Value Measurement – Scope of portfolio exception, IAS 40 Investment Properties – Interrelationship between IFRS 3 and IAS 40). The amendments apply to reporting periods beginning on or after January 1, 2015. The adoption of these amendments had no impact on the consolidated financial statements of the Group.

IFRS AND IFRIC ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPROVED BY THE EUROPEAN UNION BUT NOT YET MANDATORY APPLICABLE AND NOT EARLY ADOPTED BY THE GROUP AS AT DECEMBER 31, 2015

The Group has not adopted the following new and amended standards, that have been issued but are not mandatory applicable.

� Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” (issued on November 21, 2013) concerning the recognition of contributions from employees or third parties to defined benefit plans. The amendment applies at the latest for reporting periods beginning on February 1, 2015 or at a later date.

� Amendment to IFRS 11 Joint Arrangements – “Accounting for acquisitions of interests in joint operations” (issued on May 6, 2014) concerning the accounting for acquisitions of interests in a joint operation when the operation constitutes abusiness. The amendments apply as of January 1, 2016, though early adoption is allowed.

� Amendments to IAS 16 Property, plant and equipment and IAS 41 Agriculture – “Bearer Plants” (issued on June 30, 2014) providing for bearer plants, i.e. fruit trees that bear produce annually (such as vines, hazelnut plants) to be accounted for under IAS 16 (rather than IAS 41). The amendments apply as of January 1, 2016, though early adoption is allowed.


� Amendments to IAS 16 Property, plant and Equipment and IAS 38 Intangibles Assets – “Clarification of acceptable methods of depreciation and amortisation” (issued on May 12, 2014) establishing that a depreciation or amortisation methodthat is based on revenue is not appropriate, because the revenue arising from the operation of a business of which the asset under depreciation or amortisation is part reflects a different pattern from the mere use of the economic benefits arising from the asset, which is a pre-requisite for depreciation or amortisation. The amendments apply as of January 1, 2016, though early adoption is allowed.

� Amendment to IAS 1 – “Disclosure Initiative” (issued on December 18, 2014): the goal of the amendments is to provide some clarifications on disclosures and other elements that may be perceived as hindrance to a clear and intelligible presentation of financial statements. The amendments apply as of January 1, 2016, though early adoption is allowed.Directors do not expect any significant effect on the consolidated financial statements of the Group when these amendments are adopted.

On December 12, 2013, the IASB published documents “Annual Improvements to IFRSs: 2010-2012 Cycle” (including IFRS 2 Share Based Payments – Definition of vesting condition, IFRS 3 Business Combination – Accounting for contingent consideration, IFRS 8 Operating segments – Aggregation of operating segments and Reconciliation of total of the reportable segments’ assets to the entity’s assets, IFRS 13 Fair Value Measurement – Short-term receivables and payables) and – on September 25, 2014 – “Annual Improvements to IFRSs: 2012-2014 Cycle” (including: IFRS 5 –

Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 – Financial Instruments: Disclosure and IAS 19 – Employee Benefits) partly amending existing standards. The amendments apply at the latest to the reporting periods starting on or after February 1, 2015 and financial years starting on or after January 1, 2016.Directors do not expect any significant effect on the consolidated financial statements of the Group when these amendments are adopted.

IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ENDORSED BY THE EUROPEAN UNION

The European Union has not yet completed its endorsement process for the standards and amendments below reported at the date of these Consolidated Financial Statements.

� IFRS 15 – Revenue from Contracts with Customers (issued on May 28, 2014) bound to replace IAS 18 – Revenue and IAS 11 – Construction Contracts, as well as the interpretations IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter Transactions Involving Advertising Services. The standard provides for a new revenue recognitionmodel, which will be applicable to all agreements made with customers, with the exception of those falling under the scope of application of other IFRSs, such as leases, insurance contracts and financial instruments. The main steps for revenue recognition according to the new model are:o identifying the agreement in place with the customer; o identifying the performance obligations under the agreement; o defining the transaction price; o price allocation to the performance obligations under the agreement;


o revenue recognition criteria when the entity satisfies each performance obligation.

This standard is applicable as of January 1, 2018, though early adoption is allowed. Directors expect that the adoption of IFRS 15 will have an impact on the revenue recognition and the relevant disclosure included in the Group’sconsolidated financial statements. Still, it will be impossible to provide a reasonable estimate as to the effects until the Group completes a detailed analysis of the agreements in place with the customers.

� Final version of IFRS 9 – Financial instruments (issued on July 24, 2014). The standard includes the results of the classification, valuation, impairment and hedge accounting phases relating to the IASB project pending the replacement of IAS 39: o it introduces new criteria to classify and measure financial assets and

liabilities. o With reference to the impairment model, the new standard requires the

losses on receivables to be estimated based on the expected losses model (instead of the incurred losses model of IAS 39) using information that can be evidenced, available free of charge or without unreasonable effort and including historic, current and forecast data.

o A new hedge accounting model is introduced (additional types of transactions can be designated for hedge accounting, different accounting method for forward contracts and options when they are included in a hedge accounting transaction, changes to effectiveness test).

The new standard, which supersedes the previous versions of IFRS 9, must be applied to reporting period beginning on January 1, 2018 and thereafter. Directors expect IFRS 9 to have a significant impact on the balances and the relevant disclosures in the Consolidated Financial Statements of the Group. Still, it will be impossible to provide a reasonable estimate as to the effects until the Group completes a detailed analysis.

� On January 13, 2016, the IASB issued IFRS 16 – Leases which is to replace IAS 17 – Leases, as well as IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.The new standard provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset to differentiate between lease and service agreements according to: asset identification, right to replacement of the asset, right to obtain all economic benefits arising out of use of the asset and right to control the use of the asset underlying the agreement. The standard introduces a single lessee accounting model for recognising and measuring lease agreements, which provides for the underlying asset – including assets underlying operating leases – to be recognised in the statement of financial position as assets and leas financial liability. Lessees may elect to not recognise agreements for low-value assets or with a term of up to 12 within the scope of this standard. No significant changes are introduced for lessor accounting.The standard applies for reporting period beginning on or after January 1, 2019. Early application is only allowed for early adopters of IFRS 15 - Revenue from Contracts with Customers. Directors expect that the adoption of IFRS 16 will have a significant impact on lease accounting and the relevant disclosures


included in the Group’s Consolidated Financial Statements. Still, it will be impossible to provide a reasonable estimate as to the effects until the Group completes a detailed analysis of the relevant agreements.

� Document “Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)” (issued on December 18, 2014) introduces certain changes to address issues arisen after the application of the consolidation exception granted to investment entities. The amendments apply at the latest as of the reporting period starting on January 1, 2016 or at a later date. Early adoption is allowed. Directors do not expect any significant effect on the consolidated financial statements of the Group when these amendments are adopted, as the Company does not meet the definition of investment entity.

On September 11, 2014 the IASB issued an amendment to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. The purpose of these amendments was to resolve the conflict between IAS 28 and IFRS 10 concerning the measurment of profit or loss arising from transfers or assignments of a non-monetary asset to a joint venture or associate in return for its shares. The IASB has suspended the application of these amendments for the time being.


3. FINANCIAL ASSETS

Classification and initial recognition

In accordance with IAS 39, financial assets are to be classified in the following four categories:

1. financial assets at fair value through profit or loss;2. held-to-maturity investments;3. loans and receivables;4. available-for-sale financial assets.

The classification depends on the purpose for which assets are bought and held. Management decides on their initial classification at the time of initial recognition, subsequently checking that it still applies at the end of each reporting period.

The main characteristics of the assets mentioned above are as follows:

Financial assets at fair value through profit or lossThis is made up of two sub-categories:- financial assets held specifically for trading purposes;- financial assets to be measured at fair value under the fair value option designation. This category also includes all financial investments, other than equity instruments that do not have a price quoted on an active market, but for which the fair value can bedetermined.Derivatives are included in this category, unless they are designated as hedging instruments, and their fair value is booked to the Income Statement.

At the time of initial recognition, financial assets held for trading are recognised at fairvalue, not including the transaction costs or income associated with the same instruments, which are recognised in the Income Statement.

All of the assets in this category are classified as current if they are held for trading purposes or if they are expected to be sold within 12 months from the end of the reporting period.

Designation of a financial instrument to this category is considered final (IAS 39 envisages some exceptional circumstances in which said financial assets may be reclassified in another category) and can only be done on initial recognition.

Held-to-maturity investments These are non-derivative assets with fixed or determinable payments and fixed maturities which the Group intends to hold to maturity (e.g. subscribed bonds).The intention and ability to hold the security to maturity must be evaluated on initial recognition and confirmed at the end of each reporting period.In the case of early disposal of securities belonging to this category (for a significant amount and not motivated by particular events), the entire portfolio is reclassified to financial assets available for sale and restated at fair value.


Loans and receivablesThese are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market and in which the Group does not intend to trade.They are included in current assets except for the portion falling due beyond 12 months from the end of the reporting period, which is classified as non-current.

Available-for-sale financial assetsThis is a residual category represented by non-derivative financial assets that are designated as available for sale and which have not been assigned to one of the previous categories.“Available-for-sale financial assets” are recorded at their fair value including related purchase costs.They are classified as non-current assets, unless management intends to dispose of them within 12 months from the end of the reporting period.

Subsequent measurement

Gains and losses on “Financial assets at fair value through profit or loss” (cat. 1) are immediately booked to the Income Statement.“Available-for-sale financial assets” (cat. 4) are measured at fair value unless a market price or the fair value of equity instruments cannot be reliably determined. In this case the cost method is used.Gains and losses on “Available-for-sale financial assets” (cat. 4) are booked to a separate item under Other comprehensive income until they have been sold or cease to exist, or until it has been ascertained that they have suffered an impairment loss. When such events take place, all gains or losses recognised and booked to Other comprehensive income up to that moment are transferred to the Income Statement.

Fair value is the amount for which an asset could be exchanged, or that would be paid to transfer a liability (exit price) in an arm’s length transaction between informed and independent parties. Consequently, it is assumed that the holder is a going-concern entity and that none of the parties needs to liquidate their assets in a forced sale at unfavourable conditions.

In the case of securities traded on regulated markets, fair value is determined with reference to the bid price at the close of trading at the end of the reporting period.In cases where no market valuation is available for an investment, fair value is determined either on the basis of the current market value of another very similar financial instrument or by using appropriate financial techniques (such as discounted cash flow analysis).Purchases or sales regulated at "market prices" are recognised on the day of trading, which is the day on which the Group takes a commitment to buy or sell the asset.

"Held-to-maturity investments" (cat. 2) and "Loans and receivables" (cat. 3) are measured at their "amortised cost" using the effective interest rate and taking account of any discounts or premiums obtained at the time of acquisition so that they can be recognised over the entire period until their maturity. Gains or losses are booked to the Income Statement either at the time that the investment reaches maturity or when an


impairment arises, in the same way that they are recognised during the normal process of amortisation that is part of the amortised cost method.

Investments in financial assets can only be derecognised once the contractual rights to receive the cash flows deriving from such investments have expired (e.g. final redemption of bonds) or if the Group transfers the financial asset and all of the risks and benefits attached to it.


B) SEGMENT INFORMATION

4. OPERATING SEGMENTS

In compliance with the provisions of IFRS 8, the following information is provided by operating segments (business segments) and performance indicators that play a key role in the Group's strategic decisions.As the analysis by business segments is given higher priority in the decision-making process, the analysis by geographic areas is not presented.During the year 2015, the new top management team implemented a leaner, more product-oriented internal organisation based on three Business Units: Suspensions, Filtration, and Air&Cooling (until fiscal year 2014 the business units “Filtration” and “Air&Cooling” were part of the “Engine System” business unit).

Business segments

With regard to the business segments, disclosures concerning the three business units: Air&Cooling, Suspensions and Filtration are provided below. Figures for the Holding Company Sogefi S.p.A. and the subsidiary Sogefi Purchasing S.A.S. are also provided for the purpose of reconciliation with consolidated values.

The tables below provide the Group’s income statement and statement of financial position figures for 2014 and 2015:


(in thousands of Euro)Air&Cooling Suspensions Filtration Sogefi S.p.A. /

Sogefi Purch. S.A.S.

Adjustments Sogefi consolidated

f/s

REVENUESSales to third parties 372,001 505,343 472,047 - - 1,349,391Intersegment sales 2,311 1,266 1,662 27,403 (32,642) - TOTAL REVENUES 374,312 506,609 473,709 27,403 (32,642) 1,349,391RESULTSEBIT 14,219 18,206 28,398 (7,123) (5,429) 48,271Financial expenses, net (26,818)Income from equity investments - Losses from equity investments - Result before taxes 21,453Income taxes (13,058)Loss (profit) attributable to non-controlling interests (4,756)NET RESULT 3,639

ASSETSSegment assets 254,682 415,632 320,034 629,887 (700,230) 920,005Equity investments in associates - - - - - - Unallocated assets - - - - 172,199 172,199TOTAL ASSETS 254,682 415,632 320,034 629,887 (528,031) 1,092,204LIABILITIESSegment liabilities 159,470 289,284 218,623 482,035 (237,994) 911,418TOTAL LIABILITIES 159,470 289,284 218,623 482,035 (237,994) 911,418OTHER INFORMATIONIncrease in tangible and intangible fixed assets 21,917 25,865 29,510 11,140 (4,025) 84,407Depreciation, amortisation and writedowns 14,167 23,149 19,223 2,645 2,000 61,184

2014

STATEMENT OF FINANCIAL POSITION


(in thousands of Euro) Air&Cooling Suspensions Filtration Sogefi S.p.A.

/ Sogefi Purch. S.A.S.

Adjustments Sogefi consolidated

f/s

REVENUESSales to third parties 407,293 556,758 534,954 45 - 1,499,050Intersegment sales 1,988 1,257 1,489 29,689 (34,423) - TOTAL REVENUES 409,281 558,015 536,443 29,734 (34,423) 1,499,050RESULTSEBIT (2,522) 35,441 32,228 (13,100) (1,305) 50,742Financial expenses, net (32,778)Income from equity investments - Losses from equity investments - Result before taxes 17,964Income taxes (12,913)Loss (profit) attributable to non-controlling interests (3,931)NET RESULT 1,120

ASSETSSegment assets 267,423 420,642 333,112 642,567 (716,023) 947,721Equity investments in associates - - - - - - Unallocated assets - - - - 172,199 172,199TOTAL ASSETS 267,423 420,642 333,112 642,567 (543,824) 1,119,920LIABILITIESSegment liabilities 163,710 292,604 213,364 489,914 (230,068) 929,524TOTAL LIABILITIES 163,710 292,604 213,364 489,914 (230,068) 929,524OTHER INFORMATIONIncrease in tangible and intangible fixed assets 21,640 22,661 36,415 2,210 (1,283) 81,643Depreciation, amortisation and writedowns 16,589 22,621 20,387 3,615 1,539 64,751

STATEMENT OF FINANCIAL POSITION

2015

Please note that the Air&Cooling Business Unit figures include the net book value of the Systèmes Moteurs Group coming from local financial statements – in other words, not including the fair value adjustment of net assets after the Purchase Price Allocationperformed in 2011 – but only the adjustments related to the measurement of product warranty provisions (contingent liabilities booked during the PPA); the remaining adjustments arising from the Purchase Price Allocation are posted in column "Adjustments".Adjustments to “Intersegment sales” mainly refer to services provided by the Holding Company Sogefi S.p.A. and by subsidiary Sogefi Purchasing S.A.S. to other Group companies (see note 40 for further details on the nature of the services provided). This item also includes intersegment sales between the business units. Intersegmenttransactions are conducted according to the Group's transfer pricing policy. The adjustments to “EBIT” refer to depreciation and amortisation linked to the revaluation of assets resulting from the acquisition of 40% of Sogefi Rejna S.p.A. and its subsidiaries in the year 2000 and of the Systèmes Moteurs Group in the year 2011. In the Statement of Financial Position, the adjustments to the item "Segment assets" refer to the consolidation entry of investments in subsidiaries and intercompany receivables.


Adjustments to “Unallocated assets” mainly include the goodwill and the fixed assets revaluations resulting from the acquisitions of: the Allevard Ressorts Automobile Group, 40% of Sogefi Rejna S.p.A., the Filtrauto Group, 60% of Sogefi M.N.R. Filtration India Private Ltd (now merged into Sogefi-MNR Engine Systems India Pvt Ltd) and Systèmes Moteurs Group.“Depreciation, amortisation and writedowns” include writedowns of tangible and intangible fixed assets for the amount of Euro 357 thousand, of which Euro 243thousand relate to the French subsidiary S. ARA Composite S.A.S.; Euro 114 thousand reflect development projects of subsidiary Sogefi-MNR Engine Systems India Pvt Ltd. that cannot be recovered.

These assets were written down based on the recoverable value of assets at year-end date, which is considered to be zero.

Information on the main customers

Revenues from sales to third parties as of December 31, 2015 accounting for over 10% of Group revenues are shown in the following table:

(in thousands of Euro)Group BU

FiltrationBU

Air&Cool.BU

SuspensionsAmount %

Ford 200,262.6 13.4 48,981.2 68,812.4 82,469.0FCA/CNH Industrial 179,600.6 12.0 80,873.4 53,203.3 45,523.9 Renault/Nissan 175,317.0 11.7 50,396.3 45,229.7 79,691.0PSA 166,413.0 11.1 53,869.9 52,779.0 59,764.2

2015Group

Information on geographic areas

The breakdown of revenues by geographical area "of destination", in other words with regard to the nationality of the customer, is analysed in the Directors' Report and in the notes to the Income Statement.

The following table shows a breakdown of total assets by geographical area of origin:

(in thousands of Euro)Europe South

AmericaNorth

AmericaAsia Adjustments Sogefi

consolidated f/s

TOTAL ASSETS 1,458,305 111,324 114,342 115,911 (707,678) 1,092,204

(in thousands of Euro)Europe South

AmericaNorth

AmericaAsia Adjustments Sogefi

consolidated f/s

TOTAL ASSETS 1,439,944 92,635 138,228 136,111 (686,998) 1,119,920

2014

2015


C) NOTES ON THE MAIN ITEMS OF THE STATEMENT OF FINANCIAL POSITION

C 1) ASSETS

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents amount to Euro 121,892 thousand versus Euro 124,033 thousand as of December 31, 2014 and break down as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Short-term cash investments 121,835 123,976Cash on hand 57 57TOTAL 121,892 124,033

“Short-term cash investments” earn interest at a floating rate.

For further details, please refer to the Analysis of the net financial position in note 22 and to the Consolidated Cash Flow Statement included in the financial statements.

As of December 31, 2015, the Group has unused lines of credit for the amount of Euro 300,701 thousand. These funds are available for use on demand, because the conditions required for their availability are met.

Please note that this item includes ARS (Argentine Peso) 13,619 thousand, i.e. the equivalent of Euro 966 thousand at the exchange rate in force on December 31, 2015 (ARS 41,242 thousand, the equivalent of Euro 4,013 at the exchange rate in force on December 31, 2014) held by the Argentinian subsidiaries.

6. OTHER FINANCIAL ASSETS

“Other financial assets” can be broken down as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Securities held for trading 17 18Financial receivables 1,438 2,000Held-to-maturity investments 3,949 6,953Assets for derivative financial instruments 931 519TOTAL 6,335 9,490

“Held-to-maturity investments” are measured at amortised cost and include bank term deposits. The reduction of this item is due to the natural expiration of these deposits.“Assets for derivative financial instruments” total Euro 931 thousand and refer to the fair value of forward foreign exchange contracts. Further details can be found in the analysis of financial instruments contained in note 39.


7. INVENTORIES

The breakdown of inventories is as follows:

(in thousands of Euro)

GrossWrite-downs Net Gross

Write-downs Net

Raw, ancillary and consumable materials 60,298 3,829 56,469 55,863 4,141 51,722Work in progress and semi-finished products 14,171 283 13,888 14,126 569 13,557Contract work in progress and advances 39,190 12 39,178 29,573 21 29,552Finished goods and goods for resale 55,633 5,474 50,159 54,984 5,673 49,311TOTAL 169,292 9,598 159,694 154,546 10,404 144,142

12.31.2015 12.31.2014

The gross value of inventories increased by Euro 14,746 thousand compared to the previous year (the increase would amount to Euro 18,513 thousand exchange rates being equal), of which Euro 9,617 thousand reflect an increase in tooling for sale to customers included in “Contract work in progress and advances” (mostly relating to the Air and Cooling business unit), whereas the remaining portion originates from increased volumes.

Writedowns consist for the most part of accruals for raw materials that can no longer be used for current production and for obsolete or slow-moving finished goods, goods for resale and ancillary materials. The decrease in the provisions – by Euro 806 thousand –

reflects products scrapped during the year for the amount of Euro 1,299 thousand, that were partly offset by further accruals for Euro 636 thousand and a negative currency exchange effect for Euro 143 thousand.

8. TRADE AND OTHER RECEIVABLES

Current receivables break down as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Trade receivables 142,266 150,976Less: allowance for bad debts 5,367 5,170Trade receivables, net 136,899 145,806Due from Parent Company 6,590 2,277Tax receivables 26,753 22,564Other receivables 7,915 6,884Other assets 3,974 3,599TOTAL 182,131 181,130

“Trade receivables, net” are non-interest bearing and have an average due date of 32 days, against 37 days recorded at the end of the previous year. It should be noted that as of December 31, 2015, the Group factored trade receivables for Euro 88,972 thousand (Euro 78,784 thousand as of December 31, 2014), including


an amount of Euro 48,487 thousand (Euro 45,814 thousand as of December 31, 2014) which was not notified and for which the Group continues to manage collection services. The risks and benefits related to these receivables have been transferred to the factor; therefore these receivables have been derecognised in the Statement of Financial Position debiting the consideration received from the factoring company.

Excluding the factoring transactions (Euro 88,972 thousand as at December 31, 2015 and Euro 78,784 thousand as at December 31, 2014) and the effect of exchange rates (Euro 4,866 thousand), net trade receivables increased by Euro 6,147 thousand as a result of the increase in the Group’s business activities in the last quarter of the year compared to the same quarter of the previous year, which was partly offset by lower past due receivables (Euro 6,333 thousand) and changes in the payment terms of bonuses and productivity bonuses in favour of customers.

Further adjustments were booked to “Allowance for doubtful accounts” during the year for a total of Euro 1,554 thousand, against net utilisations of the allowance for the amount of Euro 1,180 thousand (see note 39 for further details). Allowance balance decreased by Euro 177 thousand due to foreign currency exchange effects. Writedowns, net of provisions not used during the period, were charged to Income Statement under the item “Variable cost of sales – Variable sales and distribution costs”.

“Due from Parent Company” as of December 31, 2015 is the amount receivable from the Parent Company CIR S.p.A. arising from the participation in the Group tax filing system on the part of the Italian companies of the Group. Outstanding receivables as at December 31, 2014 (totalling Euro 2,277 thousand) collected in 2015 amounted to Euro 1,487 thousand.See chapter F for the terms and conditions governing these receivables from CIR S.p.A..

“Tax receivables” as of December 31, 2015 include tax credits due to the Group companies by the tax authorities of the various countries. The increase in this item reflects VAT credits and indirect taxes for the amount of Euro 2,193 thousand, and a tax credit of Euro 2,878 thousand relating to research and development grants in favour of the French subsidiaries; the item considers also a decrease of other tax credits by Euro 882 thousand.It does not include deferred taxes which are treated separately.

“Other receivables” are made up as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Amounts due from social security institutions 204 383Amounts due from employees 320 796Advances to suppliers 2,659 3,006Due from others 4,732 2,699TOTAL 7,915 6,884

The increase in “Other receivables” refers for the most part to subsidiaries Sogefi Rejna S.p.A. and Allevard Sogefi U.S.A. Inc. and reflects insurance indemnities.


The item “Other assets” mainly includes accrued income and prepayments on insurance premiums, rents, indirect taxes relating to buildings and on costs incurred for sales activities.

9. TANGIBLE FIXED ASSETS

The net carrying amount of tangible fixed assets as of December 31, 2015 amounted to Euro 252,252 thousand versus Euro 244,061 thousand at the end of the previous year and breaks down as follows:

(in thousands of Euro)Land Buildings,

plant and machinery, commercial

and industrial equipment

Other assets

Assets under construction

and payments on account

TOTAL

Balance at January 1 14,286 191,283 5,348 33,144 244,061Additions of the period - 19,418 1,623 30,225 51,266Disposals during the period (2) (203) (28) (27) (260)Exchange differences 15 (4,939) (352) (326) (5,602)Depreciation for the period - (35,351) (1,729) (25) (37,105)Write-downs/revaluations during the period - (243) - - (243)Reclassification of non-current asset held for sale - - - - - Other changes - 31,896 481 (32,242) 135Balance at December 31 14,299 201,861 5,343 30,749 252,252Historical cost 14,299 804,801 26,647 31,477 877,224of which: leases - gross value - 13,751 86 369 14,206Accumulated depreciation - 602,940 21,304 728 624,972of which: leases - accumulated depreciation - 7,288 86 - 7,374Net value 14,299 201,861 5,343 30,749 252,252Net value - leases - 6,463 - 369 6,832

2015


(in thousands of Euro)Land Buildings,

plant and machinery, commercial

and industrial equipment

Other assets

Assets under construction

and payments on account

TOTAL

Balance at January 1 15,444 185,920 4,957 30,094 236,415Additions of the period - 16,051 1,729 24,498 42,278Disposals during the period (1,251) (2,520) (30) (13) (3,814)Exchange differences 93 4,629 156 878 5,756Depreciation for the period - (33,667) (1,658) - (35,325)Write-downs/revaluations during the period - (1,315) (10) (35) (1,360)Reclassification of non-current asset held for sale - - - - - Other changes - 22,185 204 (22,278) 111Balance at December 31 14,286 191,283 5,348 33,144 244,061Historical cost 14,286 803,835 26,802 33,872 878,795of which: leases - gross value - 10,694 77 - 10,771Accumulated depreciation - 612,552 21,454 728 634,734of which: leases - accumulated depreciation - 5,551 72 - 5,623Net value 14,286 191,283 5,348 33,144 244,061Net value - leases - 5,143 5 - 5,148

2014

Investments during the year amounted to Euro 51,266 thousand compared with Euro 42,278 thousand in the previous year.

The larger projects regarded the “Assets under construction and payments on account”

and “Buildings, plant and machinery, commercial and industrial equipment” categories.

Major investments in the “Assets under construction and payments on account” category mainly reflect investments in subsidiaries Sogefi Filtration do Brasil Ltda for the adjustments made to meet the needs of manufacture at the new plant in Atibaia, Brazil; Allevard Sogefi U.S.A. Inc. and Sogefi Filtration Argentina S.A. to improve production processes and develop new products; Sogefi Rejna S.p.A. to increase production capacity and develop new products;, LPDN GmbH to improve production processes and develop new products and for extraordinary maintenance operations. This item also includes investments in the French companies Allevard Rejna Autosuspensions S.A., Filtrauto S.A. and Systèmes Moteurs S.A.S. for the enhancement of production capacity, the development of new products, the improvement of production processes and quality, and the adjustment of the production lines in compliance with health and safety rules and regulations.

Among the most significant projects in the “Buildings, plant and machinery, commercial and industrial equipment” category, noteworthy are the investments in subsidiaries Sogefi (Suzhou) Auto Parts Co., Ltd to expand production capacity as new products are developed; Allevard Rejna Autosuspensions S.A. to improve production processes and develop new products; S.C. Systèmes Moteurs S.r.l. and Allevard Sogefi U.S.A. Inc. to


expand production capacity and develop new products; Sogefi Engine Systems Canada Corp. to improve processes and develop new products.

No relevant disposals were made during 2015.

“Depreciation for the period” has been recorded in the appropriate item in the Income Statement.

“Writedowns/revaluations during the period” totalled Euro 243 thousand and mainly relates to the French subsidiary S. ARA Composite S.A.S..Impairment losses less reversals are booked to “Other non-operating expenses (income)”.

“Other changes” refer to the completion of projects that were under way at the end of the previous year and their reclassification under the pertinent items.

The balance of “Assets under construction and payments on account” as of December 31, 2015 includes Euro 163 thousand of advances for investments.

The main inactive assets, with a total net value of Euro 8,364 thousand, included in the item “Tangible fixed assets” mostly refer to the Lieusaint plant of subsidiary Allevard Rejna Autosuspensions S.A. (Euro 3,585 thousand) and to investment properties of the Holding Company Sogefi S.p.A. (located in Mantova and San Felice del Benaco, for a total amount of Euro 4,605 thousand). The fair value of these assets as measured by an independent expert report exceeds their net book value. The book value of said assets will be recovered through their sale rather than through their continuous use. As we do not expect to sell them within one year, they are not subject to the accounting treatment envisaged by IFRS 5 and depreciation is continued.

No interest costs were capitalised to “Tangible fixed assets” during the year 2015.

Guarantees As of December 31, 2015, tangible fixed assets are encumbered by mortgages or liens totalling Euro 7,726 thousand to guarantee loans from financial institutions, compared to Euro 6,652 thousand as of December 31, 2014. Guarantees existing as of December 31, 2015 refer to subsidiaries Sogefi Engine Systems Canada Corp., Allevard IAI Suspensions Private Ltd, United Springs B.V. and Sogefi Filtration do Brasil Ltda.

Purchase commitments As of December 31, 2015, there are binding commitments to buy tangible fixed assets for Euro 1,709 thousand (Euro 323 thousand as of December 31, 2014) relating to the subsidiaries Allevard Rejna Autosuspensions S.A. and United Springs S.A.S.. Saidcommitments will be settled within 12 months.

LeasesThe carrying value of assets under financial leases as of December 31, 2015 was Euro 14,206 thousand, and the related accumulated depreciation amounted to Euro 7,374 thousand.


Please note that in 2015, subsidiary Allevard Sogefi USA Inc. re-negotiated the financial lease agreement entered into in 2013 after the purchase of additional assets, increasing its value by Euro 2,334 thousand. The new lease agreement presents for the same annual interest rate (3.24%) and term (June 2023) as the original one.The financial aspects of the lease payments and their due dates are explained in note 16.

10. INTANGIBLE ASSETS

The net balance as of December 31, 2015 was Euro 284,050 thousand versus Euro 282,996 thousand at the end of the previous year, and breaks down as follows:

(in thousands of Euro)Develop-

ment costsIndustrial

patents and intellectual

property rights,

concessions, licences and trademarks

Other, assets under construction

andpayments on

account

Customer Relationship

Trade name

Systemes Moteurs

Goodwill TOTAL

Balance at January 1 77,773 36,033 19,767 15,833 6,951 126,639 282,996Additions of the period 16,971 2,248 11,158 - - - 30,377Disposals during the period (748) - (20) - - - (768)Exchange differences (992) (33) 277 - - - (748)Amortisation for the period (21,129) (4,071) (664) (990) (435) - (27,289)

Writedowns during the period - - (114) - - - (114)Other changes 7,487 328 (8,219) - - - (404)Balance at December 31 79,362 34,505 22,185 14,843 6,516 126,639 284,050Historical cost 184,219 64,388 25,788 19,215 8,437 149,537 451,584Accumulated amortisation 104,857 29,883 3,603 4,372 1,921 22,898 167,534Net value 79,362 34,505 22,185 14,843 6,516 126,639 284,050

2015

(in thousands of Euro)Develop-

ment costsIndustrial

patents and intellectual

property rights,

concessions, licences and trademarks

Other, assets under construction

andpayments on

account

Customer Relationship

Trade name

Systemes Moteurs

Goodwill TOTAL

Balance at January 1 70,799 28,064 13,014 16,823 7,386 126,639 262,725Additions of the period 21,016 10,151 10,962 - - - 42,129Disposals during the period - (7) - - - - (7)Exchange differences 1,875 33 588 - - - 2,496Amortisation for the period (17,412) (3,353) (485) (990) (435) - (22,675)

Writedowns during the period (1,739) - (85) - - - (1,824)Other changes 3,234 1,145 (4,227) - - - 152Balance at December 31 77,773 36,033 19,767 15,833 6,951 126,639 282,996Historical cost 171,609 61,982 22,659 19,215 8,437 149,537 433,439Accumulated amortisation 93,836 25,949 2,892 3,382 1,486 22,898 150,443Net value 77,773 36,033 19,767 15,833 6,951 126,639 282,996

2014


Investments during the year amounted to Euro 30,377 thousand.

The increases in “Development Costs” for the amount of Euro 16,971 thousand refer to the capitalisation of costs incurred by Group companies to develop new products in collaboration with leading motor vehicle manufacturers (after obtaining the nomination from the customer). The largest investments refer to the subsidiaries Systèmes Moteurs S.A.S., Filtrauto S.A., Sogefi Engine Systems Canada Corp., Sogefi Filtration do Brasil Ltda, Allevard Sogefi U.S.A. Inc., Allevard Springs Ltd, Sogefi Engine Systems Mexico S. de R.L. de C.v. and Sogefi (Suzhou) Auto Parts Co., Ltd.

Increases in “Industrial patents and intellectual property rights, concessions, licences and trademarks” amount to Euro 2,248 thousand and refer nearly entirely to the development and implementation in process of the new information system across the Sogefi Group.This integrated information system is amortised on a ten-year basis, based on itsestimated useful life, starting from the date of implementation in each subsidiary.

Increases in “Other, assets under construction and payments on account”, for the amount of Euro 11,158 thousand, refer mainly to a large number of investments in the development and implementation of the new products not yet flowed into production. The highest development costs were recorded at subsidiaries Allevard Sogefi U.S.A. Inc., Sogefi Filtration Ltd, Sogefi Filtration d.o.o. and S.C. Systèmes Moteurs S.r.l.

“Disposals during the period” amount to Euro 768 thousand and mostly account for research and development costs incurred by subsidiary Systèmes Moteurs S.A.S. in developing new products charged back to auto makers.

“Writedowns”, for the amount of Euro 114 thousand, reflect development projects of subsidiary Sogefi-MNR Engine Systems India Pvt Ltd. that cannot be recovered.

The item does not include advances to suppliers for the purchase of fixed assets.

“Development costs” principally include costs generated internally, whereas "Industrial patents and intellectual property rights, concessions, licences and trademarks” consist of factors that are acquired externally for the most part. “Other, assets under construction and payments on account” include around Euro 11,920 thousand of costs generated internally.

There are no intangible assets with an indefinite useful life except for goodwill.

Goodwill and impairment test

From January 1, 2004 goodwill is no longer amortised, but subjected each year to impairment test.

The Company has identified five Cash Generating Units (CGUs), the first two re-nominated in 2015 following the change in the definitions of Business Units (note 4):

o filtration (before “engine systems – fluid filtration”)


o air and cooling (before “engine systems – filtration air and cooling”)o car suspensiono industrial vehicle suspension o precision springs

For the moment, it is possible to identify goodwill deriving from external acquisitions in three CGUs: engine systems - fluid filters, engine systems - air intake and cooling and car suspension.

The specific goodwill of “CGU Engine Systems – Fluid Filters” amounts to Euro 77,030 thousand; the goodwill of “CGU Engine Systems – Air Intake and Cooling” amounts to Euro 32,560 thousand; and the goodwill of “CGU Car Suspension” amounts to Euro 17,049 thousand.

Impairment tests have been carried out in accordance with the procedure laid down in IAS 36 to check whether there have been any losses in the value of this goodwill, by comparing the book value of the individual CGUs with their value in use, given by the present value of estimated future cash flows that are expected to result from the continuing use of the asset being tested for impairment. We used the discounted cash flows (Discounted Cash on Flow Unlevered). The Group took into account the cash flows projections expected for 2016 as determined based on the budget (approved by the Board of Directors on January 19, 2016) and the forecasts included in the 2017-2019 projection update (adjusted to eliminate any estimated benefits from future projects and reorganisations) approved by the Board of Directors on February 29, 2016 for the following years. Projections were prepared by management and approved by the Board of Directors for the sole purpose of impairment testing.Budget and projections were prepared taking into account forecasts for the automotive segment made by major sources in the industry and based on a conservative approach.

A discounting rate of 9.55%, which reflects the weighted average cost of capital, was used. The same discounting rate is used for all three CGUs. As a matter of fact, the three CGUs operate in the same sector and deal with the same kind of customers, and it is estimated that they are exposed to the same risk.

The terminal value was calculated using the “perpetual annuity” approach, assuming a growth rate (“g-rate”) of 2% (assumed to be conservative when compared to the forecasts for the automotive segment available from major sources of the industry) and considering an operating cash flow based on the last year of the projection (the year 2018), adjusted to project a stable situation “in perpetuity”, based on the following main assumptions:- a balance between capital investment and depreciation (according to the rationale of

considering the level of investment needed to "maintain" the business);- change in working capital equal to zero.As regards the average cost of capital, we calculated a weighted average of the cost of debt (taking into consideration the benchmark interest rates plus a spread) and the Company's own cost of capital, based on parameters for a group of firms operating in the European car components sector which are considered by the leading industry


analysts to be Sogefi's peers. The values used to calculate the average cost of capital (extrapolated from the main financial sources) are as follows:- financial structure of the industry: 17.1%- levered beta of the industry: 1.12- risk-free rate: 3.0% (annual average of risk-free rates of 10 year securities of the key

markets in which the Group operates, weighted by sales revenues)- risk premium: 7.0% (weighted average risk premium calculated by primary source of

the industry for the key markets in which the Group operates, weighted by sales revenues)

- debt cost spread: 3.4% (estimate based on the 2016 budget)

As far as the sensitivity analysis goes, it should be noted that:- the impairment test reached break-even point at the following discounting rates (growth rate of terminal value remaining unchanged at 2% and all other plan assumptions being equal): 16.75% for CGU Fluid Filters; 12.28% for CGU Air and Cooling; and 14.1% for CGU Car Suspension;- the impairment test reached break-even point with a significant reduction in EBIT during the specific period that was also applied to terminal value (all other plan assumptions being equal): -50.1% in CGU Filtration; -26.9% in CGU Air and Cooling; and -39.1% in CGU Car Suspension;- the impairment test reached break-even point at the following reduction rates of theterminal value “g-rate” (all other plan assumptions being equal): -8.9% in CGU Filtration; -1.4% in CGU Air&Cooling; and -4.3% in CGU Car Suspension;

The test based on the present value of the estimated future cash flows turns out a value in use of the CGUs that exceeds their carrying value, so no writedown has been posted.

11. INVESTMENTS IN JOINT VENTURES

As of December 31, 2015, there were no investments in joint ventures.

12. OTHER FINANCIAL ASSETS AVAILABLE FOR SALE

As of December 31, 2015, these assets totalled Euro 439 thousand. They are unchanged versus December 31, 2014 and break down as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Equity investments in other companies 439 439Other securities - - TOTAL 439 439

The balance of “Equity investments in other companies” essentially refers to the 22.62% shareholding in the company AFICO FILTERS S.A.E.. The equity investment was not classified as associate due to the lack of Group’s members in the management bodies of the company (which means the Group does not exert significant influence on the company). This equity investment was measured under the cost method because its fair value could not be measured reliably.


13. FINANCIAL RECEIVABLES AND OTHER NON-CURRENT RECEIVABLES

Non-current financial receivables total Euro 13,156 thousand (Euro 157 thousand as of December 31) and refer to the fair value of cross currency swap hedging contracts. Forfurther details, please refer to note 39.

“Other receivables” break down as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Pension fund surplus 23,368 23,368Other receivables 11,298 11,258TOTAL 34,666 34,626

"Other receivables" include an indemnification asset of Euro 23,368 thousand owed by the seller of Systèmes Moteurs S.A.S.' shares – booked upon the PPA of the Systèmes Moteurs Group – relating to the recovery of expenses charged by customers following claims on the quality of products sold, based on warranties given by the same seller (after possible partial indemnities obtained from insurers and suppliers). Sogefi S.p.A. initiated international arbitration proceedings, still under way, against the seller of Systèmes Moteurs S.A.S' shares to collect the payables, as provided for by the acquisition contract. For further details, please refer to note 19, paragraph "Provision for product warranties".

The item “Other receivables” also includes tax credits relating to the research and development activities of the French subsidiaries, other tax credits and non-interest bearing guarantee deposits for leased properties. These receivables will be collected over the coming years.

14. DEFERRED TAX ASSETS

As of December 31, 2015, this item amounts to Euro 65,301 thousand compared to Euro 71,126 thousand as of December 31, 2014.This amount relates to the expected benefits on deductible temporary differences, booked to the extent that it is probable that it will be recovered. Reference should be made to note 20 for a further discussion of this matter.

15. NON-CURRENT ASSETS HELD FOR SALE

As of December 31, 2015, there are no non-current assets held for sale.


C 2) LIABILITIES AND EQUITY

16. FINANCIAL DEBTS TO BANKS AND OTHER FINANCING CREDITORS

These break down as follows:

Current portion

(in thousands of Euro) 12.31.2015 12.31.2014Bank overdrafts and short-term loans 17,843 13,426Current portion of medium/long-term financial debts 74,445 64,508 of which: leases 1,252 914TOTAL SHORT-TERM FINANCIAL DEBTS 92,288 77,934Other short-term liabilities for derivative financial instruments 325 350TOTAL SHORT-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS 92,613 78,284

Non-current portion

(in thousands of Euro) 12.31.2015 12.31.2014Financial debts to banks 141,080 131,617Other medium/long-term financial debts 218,417 203,648 of which: leases 8,135 6,481TOTAL MEDIUM/LONG-TERM FINANCIAL DEBTS 359,497 335,265Other medium/long-term liabilities for derivative financial instruments 11,562 24,464TOTAL MEDIUM/LONG-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS 371,059 359,729

Bank overdrafts and short-term loans

For further details, please refer to the Analysis of the net financial position in note 22and to the Consolidated Cash Flow Statement included in the financial statements.

Current and non-current portions of medium/long-term financial debts

Details are as follows:


Balance at December 31, 2015 (in thousands of Euro):

Company Bank/Credit Institute Signing date Due date Original amount loan

Interest rate Current portion

Non-current portion

Total amount

Real Guarantees

Sogefi S.p.A. Intesa SanPaolo S.p.A. Apr - 2011 Dec - 2016 60,000Euribor trim. + 260 bps

variable 7,868 0 7,868 N/A

Sogefi S.p.A. BNP Paribas S.A. Sep - 2014 Sep - 2019 55,000Euribor trim. + 190 bps

variable 0 24,858 24,858 N/A

Sogefi S.p.A. Mediobanca S.p.A. Jul- 2014 Jan - 2016 20,000Euribor trim. + 170 bps

variable 0 19,998 19,998 N/A

Sogefi S.p.A. Banca Carige Italia S.p.A. Jul - 2011 Sep - 2017 25,000Euribor trim. + 225 bps

variable 5,231 3,969 9,200 N/A

Sogefi S.p.A. ING Bank Jul - 2015 Sep - 2020 30,000Euribor trim. + 190 bps

variable 0 29,846 29,846 N/A

Sogefi S.p.A. Mediobanca S.p.A. Jul - 2015 Jan - 2017 20,000Euribor trim. + 130 bps

variable 0 19,952 19,952 N/A

Sogefi S.p.A. Banco do Brasil S.A. Sep - 2015 Sep - 2018 19,000Euribor trim. + 130 bps

variable 3,800 15,124 18,924 N/A

Sogefi S.p.A. Banco do Brasil S.A. Dec - 2012 Apr - 2017 15,000Euribor trim. + 315 bps

variable 3,750 3,713 7,463 N/A

Sogefi S.p.A. Banca Carige Italia S.p.A. Nov - 2015 Jun - 2019 10,000Euribor trim. + 130 bps

variable 2,811 7,116 9,927 N/ASogefi (Suzhou) Auto Parts Co., Ltd ING Bank Jun - 2014 Jan - 2017 11,415 8.80% fixed 5,156 6,259 11,415 N/ASogefi (Suzhou) Auto Parts Co., Ltd ING Bank Jun - 2015 Jan - 2017 5,235 8.01% fixed 1,772 3,463 5,235 N/ASogefi (Suzhou) Auto Parts Co., Ltd Unicredit S.p.A. Jan - 2015 Jan - 2016 7,876 7.28% fixed 7,876 0 7,876 N/ASogefi (Suzhou) Auto Parts Co., Ltd Unicredit S.p.A. Nov - 2015 Nov - 2016 6,498 6.96% fixed 6,498 0 6,498 N/ASogefi (Suzhou) Auto Parts Co., Ltd Commerzbank AG Jan - 2015 Jan - 2016 3,265 5.78% fixed 3,265 0 3,265 N/ASogefi (Suzhou) Auto Parts Co., Ltd Intesa SanPaolo S.p.A. May - 2015 Dec - 2016 4,466 6.72% fixed 4,466 0 4,466 N/ASogefi (Suzhou) Auto Parts Co., Ltd Intesa SanPaolo S.p.A. May - 2015 Dec - 2016 2,702 5.52% fixed 2,702 0 2,702 N/ASogefi Filtration do Brasil Ltda Banco Itau BBA Internatio Feb - 2013 Mar - 2016 4,818 5.5% fixed 4,818 0 4,818 N/ASogefi Filtration do Brasil Ltda Banco do Brasil S.A. Sep - 2015 Aug - 2018 2,319 17.96% fixed 640 1,679 2,319 N/A

Sogefi Engine Systems Canada Corp. Ge Capital May- 2015 May- 2019 3,969

B/A 3m+ 4.207% variable 941 2,799 3,740 YES

Sogefi Filtration S.A. Banco Sabadell S.A. May - 2011 May - 2016 7,000Euribor trim. + 225 bps

variable 700 0 700 N/AS.C Systèmes Moteurs S.r.l ING Bank May - 2013 May - 2017 2,459 ROBOR 3M +5.5% 820 262 1,082 N/AOther loans 11,331 2,042 13,373 TOTAL 74,445 141,080 215,525

Line “Other medium/long-term financial debts” includes other minor loans, as well as financial lease payments in accordance with IAS 17.


Balance at December 31, 2014 (in thousands of Euro):

Company Bank/Credit Institute Signing date

Due date Original amount loan

Interest rate Current portion

Non-current portion

Total amount

Real Guarantees

Sogefi S.p.A. Intesa SanPaolo S.p.A. Apr - 2011 Dec - 2016 60,000 Euribor 3m + 230

bps variable 8,000 37,736 45,736 N/A

Sogefi S.p.A. BNP Paribas S.A. Sep - 2014 Sep - 2019 55,000 Euribor 3m + 290

bps variable - 24,777 24,777 N/A

Sogefi S.p.A. Mediobanca S.p.A. Jul - 2014 Jan - 2016 20,000 Euribor 3m + 170

bps variabile - 19,948 19,948 N/A

Sogefi S.p.A.Banca Carige Italia S.p.A. Jul - 2014 Sep - 2017 25,000

Euribor 3m + 225 bps variable 5,040 9,143 14,183 N/A

Sogefi S.p.A. Banco do Brasil S.A. Dec - 2012 Apr - 2017 15,000 Euribor 3m + 315

bps variable 3,750 7,435 11,185 N/A

Sogefi S.p.A. Unicredit S.p.A. Jul - 2014 Jul - 2019 50,000 Euribor 3m + 200

bps variable - 9,748 9,748 N/A Sogefi (Suzhou) Auto Parts Co., Ltd ING Bank Mar - 2013 Mar - 2016 9,164 9.79% fixed 4,312 4,852 9,164 N/A Sogefi (Suzhou) Auto Parts Co., Ltd ING Bank Mar - 2013 Mar - 2016 3,840 9.79% fixed 2,124 1,716 3,840 N/A Sogefi (Suzhou) Auto Parts Co., Ltd Unicredit S.p.A. Oct - 2014 Jun - 2015 9,567 7.28% fixed 9,567 - 9,567 N/A Sogefi (Suzhou) Auto Parts Co., Ltd Unicredit S.p.A. Nov - 2014 Jun - 2015 4,612 7.28% fixed 4,612 - 4,612 N/A Sogefi (Suzhou) Auto Parts Co., Ltd Commerzbank AG Dec - 2014 Jun - 2015 3,112 6.42% fixed 3,112 - 3,112 N/A Allevard Rejna Autosuspensions S.A. CIC Bank S.A. May - 2014 May - 2015 4,000

Euribor 12m + 150 bps variable 4,000 - 4,000 N/A

Sogefi Filtration do Brasil Ltda

Banco Itau BBA International S.A. Feb - 2013 Mar - 2016 6,450 5.5% fixed - 6,450 6,450 N/A

Sogefi Filtration do Brasil Ltda Banco do Brasil S.A. Jul - 2014 Aug -2017 3,517 8% fixed - 3,517 3,517 N/A Sogefi Engine Systems Canada Corp. Ge Capital Nov - 2012 Nov - 2017 3,022

B/A 3m+4.65% variable 663 1,385 2,048 YES

Sogefi Engine Systems Canada Corp. Ge Capital Nov - 2012 Nov - 2017 3,022 6.23% fixed 662 1,392 2,054 YES

Systèmes Moteurs Sas CIC Bank S.A. May -2014 May -2015 3,500 Euribor 12m + 150

bps variable 3,500 - 3,500 N/A

Sogefi Filtration S.A. Banco Sabadell S.A. May -2011 May -2016 7,000 Euribor 3m + 225

bps variable 1,400 700 2,100 N/A Other loans 13,766 2,818 16,583 N/A TOTAL 64,508 131,617 196,124

Other short-term liabilities for derivative financial instruments

The item includes the short-term portion of the fair value of the exchange risk hedging contracts.Reference should be made to chapter E for a further discussion of this matter.


Other medium/long-term financial debts

As of December 31, 2015, details were as follows (in thousands of Euro):

Company Bank/Credit Institute Signing date Due date Original amount loan

(in thousands)

Interest rate Total amount at December 31, 2015 (in thousands of

Euro)

Real guarantees

Sogefi S.p.A. Private placement May - 2013 May - 2023 USD

115,000 Fixed coupon 600

bps 105,302 N/A

Sogefi S.p.A. Private placement May - 2013 May - 2020 Euro 25,000 Fixed coupon 505

bps 24,940 N/A

Sogefi S.p.A. Equity linked bond May - 2014 May - 2021 Euro

100,000 Fixed coupon 2%

year 78,627 N/AOther financial debts 9,548TOTAL 218,417

Line “Other loan” includes other minor loans, as well as financial lease payments in accordance with IAS 17.

As of December 31, 2014, details were as follows (in thousands of Euro):

Company Bank/Credit Institute Signing date

Due date Original amount loan

(in thousands)

Interest rate Total amount at December

31, 2014 (in thousands of

Real guarantees

Sogefi S.p.A. Private placement May - 2013 May - 2023 USD


bps 94,359 N/A

Sogefi S.p.A. Private placement May - 2013 May - 2020 Euro


bps 24,922 N/A

Sogefi S.p.A. Equity linked bond May - 2014 May - 2021 Euro

100,000 Fixed coupon 2%

year 75,527 N/A

Other financial debts 8,840 N/A

TOTAL 203,648

The bond of USD 115,000 thousand increased as a result of the variation into the Euro-to-USD exchange rate (hedged as detailed in section E).

On May 13, 2014, the Board of Directors resolved to issue the convertible bonds “€ 100,000,000 2 per cent. Equity Linked Bonds due 2021”, which were placed with institutional investors on May 14, 2014. Settlement took place on May 21, 2014 when the bonds were issued and investors paid a subscription price for a total nominal amount of Euro 100 million. Bond term is seven years from date of settlement. The bonds were listed on the Third Market (MTF) of the Vienna Stock Exchange on June 13, 2014 with a minimum denomination of Euro 100 thousand and carry a six-monthly coupon at a fixed annual interest rate of 2%.The Extraordinary Shareholders' Meeting of September 26, 2014 authorised a share capital increase in cash instalments with the exclusion of the shareholders' option right under article 2441, paragraph 5, of the Italian Civil Code, for a maximum total nominal amount of Euro 9,657,528.92, to be paid up by issuing up to 18,572,171 Sogefi ordinary shares, in one or more instalments, to be exclusively used for said bonds. According to the regulations, the Holding Company Sogefi S.p.A. had the right to settle any conversion by assigning Sogefi ordinary shares, by cash or a combination of ordinary shares and cash.


At maturity date (May 21, 2021), the bonds will be paid back in a single instalment, unless they are redeemed or converted earlier.Each bondholder may request early redemption in cash up to an amount equal to the nominal value of the Bonds plus accrued interest not yet paid upon occurrence of a Change of Control Event (when a party other than the current controlling parties holds more than 50% of shares with voting rights directly or indirectly, as provided for by the Regulations) and of a Free Float Event (when the Free Float of ordinary shares drops below 20%, as provided for by the Regulations).The fair value of these options was deemed to be immaterial.

Upon the decision of the Board of Directors of January 19, 2015 and the execution of a formal waiver (Deed Poll), subject to the British law, on January 28, 2015 (notified to the agent on January 29. 2015), the Holding Company Sogefi S.p.A. has unilaterally waived its right to refund the convertible bonds in cash rather than ordinary shares in case of the conversion right being exercised under the bond issue regulations. This waiver is final, unconditional and irrevocable. The matter of the waiver to this right has a similar effect, under the British law, to an amendment to the bond issue regulations.As at January 28, 2015 the fair value of the option (calculated based on the same model applied on December 31, 2014) amounted to Euro 9,090 thousand (Euro 10,540 thousand at December 31, 2014). This produced a positive effect in the 2015 Income Statement for Euro 1,450 thousand. Moreover, since the execution of the deed poll has a similar effect to an amendment of the bond issue regulations, the Holding Company Sogefi S.p.A. reconsidered the liability-equity classification of the option as recorded at the first posting of the option (upon the expiry of the call option in favour of the Holding Company Sogefi S.p.A. in an irrevocable, final and unconditional fashion). Therefore, on that date the Holding Company Sogefi S.p.A. reclassified the amount for the option described above (Euro 9,090 thousand) under the item "Other medium/long-term financial liabilities for derivative financial instruments" to an equity reserve, since bond holders will have solely the right to convert the bonds in a fixed and pre-arranged number of shares.

The Holding Company Sogefi S.p.A. may fully redeem the bonds early up to the amount of their nominal value plus accrued interest not yet paid in the cases provided for by the Regulations, in line with market practice, where (i) early conversion or redemption rights have been exercised for at least 85% of the original nominal amount of the Bond, and (ii) the trading price of the ordinary shares of the Company exceeds a certain threshold at certain specific dates, as specified in the Regulations.

During the second half of 2015, the Holding Company Sogefi S.p.A. entered into the following new bank loan agreements and utilised their full amounts:

- revolving loan of Euro 20 million obtained from Mediobanca S.p.A. in July 2015, expiring in January 2017, at market rates linked to the 3-month Euribor plus a spread of 130 basis points;

- loan of Euro 30 million, repayable in instalments during the term of the loan, granted by Ing Bank N.V. in July 2015, with final expiry date in September 2020, at market rates linked to the 3-month Euribor plus a spread of 190 basis points;


- loan of Euro 19 million, repayable in instalments during the term of the loan, granted by Banco do Brasil S.A. in September 2015, with final expiry in September 2018, at market rates linked to the 3-month Euribor plus a spread of 130 basis points;

- loan of Euro 10 million, repayable in instalments during the term of the loan, granted by Banca Carige Italia S.p.A. in November 2015, with final expiry in June 2019, at market rates linked to the 6-month Euribor plus a spread of 130 basis points.

When the new loans were taken out, the Holding Company Sogefi S.p.A. redeemed the revolving portions of the loans granted by Intesa Sanpaolo S.p.A. (Euro 30 million) and Unicredit S.p.A. (Euro 10 million). Such revolving portions remain available for draw-down to the Holding Company Sogefi S.p.A. until loan expiry.

It should also be noted that, in November 2014, the Holding Company Sogefi S.p.A. had executed a revolving loan agreement with Société Générale for a total amount of Euro 30 million expiring in November 2019. As at December 31, 2015, the Company has not carried out any draw-down from such loan.

The existing loans are not secured by the Holding Company Sogefi S.p.A.’s assets. Furthermore, note that, contractually, the spreads relating to the loans of the Holding Company Sogefi S.p.A. are reviewed every six months on the basis of the computation of the consolidated NFP/normalised consolidated EBITDA ratio. For an analysis of the covenants relating to loans outstanding at the end of the period, please refer to the note below entitled “Analysis of the financial position”.

Other medium/long-term financial liabilities for derivative financial instruments

The item includes the medium/long-term portion of the fair value of the interest and exchange risk hedging instruments.Reference should be made to chapter E for a further discussion of this matter.

Finance leases

The Group has finance leases as well as rental and hire contracts for building, plant and machinery that, according to their type, cover almost the entire useful life of the asset concerned. The assets held under these leases, rental and hire contracts are booked in accordance with IAS 17 as though they were fixed assets owned by the company, disclosing their historical cost, depreciation, the financial cost and the residual liability.

Future payments deriving from these contracts can be summarised as follows:


(in thousands of Euro) Instalments CapitalWithin 12 months 1,721 1,252Between 1 and 5 years 6,508 5,308Beyond 5 years 3,028 2,827Total lease payments 11,257 9,387Interests (1,870) - TOTAL PRESENT VALUE OF LEASE PAYMENTS 9,387 9,387

The contracts included in this item refer to the following subsidiaries:

- Sogefi Filtration Ltd for a long-term rental contract for the production site in Tredegar. The contract expires in September 2022 and the original total amount of the contract was Euro 3,611 thousand; the future capital payments amount to Euro 2,316 thousand and the annual nominal rate of interest applied by the lessor is 11.59%.The Group has given sureties for this contract.This rental contract has been accounted for as financial leases, as required by IAS 17, where the present value of the rent payments amounted approximately with the fair value of the asset at the time the contract was signed.

- Allevard Sogefi USA Inc. has entered into the following lease contracts for the Prichard production site relating to:a) plants, machinery and improvements to the building for an original amount of Euro 1,470 thousand. The contract expires in May 2019, the future capital payments amount to Euro 555 thousand and the annual interest rate applied by the lessor is equal to 3.92%. The Group has given sureties for this contract;b) plants, machinery and improvements to the building for an original amount of Euro 2,643 thousand. The contract expires in July 2019, the future capital payments amount to Euro 1,088 thousand and the annual interest rate applied by the lessor is equal to 3%. The Group has given sureties for this contract.c) plants, machinery and improvements to the building for an original amount of Euro 3,992 thousand. Please note that in 2015, subsidiary Allevard Sogefi USA Inc. re-negotiated the financial lease agreement entered into in 2013 after the purchase of new machinery, increasing its value by Euro 1,490 thousand. The new lease agreement provides for the same annual interest rate (3.24%) and term (June 2023). Overall residual principal amount is Euro 5,428 thousand.The Group has given sureties for this agreement.

There are no restrictions of any nature on these leases. Upon expiry of the contracts ownership of the assets is transferred to the lessee without payment of any purchase price. These contracts are therefore accounted for as financial leases, as required by IAS 17.


17. TRADE AND OTHER CURRENT PAYABLES

The amounts shown in the financial statements can be broken down into the following categories:

(in thousands of Euro) 12.31.2015 12.31.2014Trade and other payables 325,421 309,808Tax payables 6,071 5,323TOTAL 331,492 315,131

Details of trade and other payables are as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Due to suppliers 256,544 242,383Due to the parent company 2,428 142Due to tax authorities for indirect and other taxes 8,607 10,144Due to social and security institutions 21,750 20,514Due to employees 29,719 30,049Other payables 6,373 6,576TOTAL 325,421 309,808

Amounts “Due to suppliers ” are not interest-bearing and are settled on average in 70 days (74 days at December 31, 2014). There is no significant concentration of payables due to any one supplier or small group of suppliers.

The amounts “Due to suppliers” increased by Euro 14,161 thousand (by Euro 17,141 thousand exchange rates being equal); this is mainly due to business growth in the last portion of 2015 compared to the same period of 2014.

Amounts “Due to parent company” reflect the consideration of Euro 1,454 thousand due for the fiscal surplus transferred by companies that have joined the CIR Group tax filing system; Euro 898 thousand represent the tax debt in connection with the CIR Group tax filing system, and Euro 76 thousand reflect outstanding Directors' remuneration charged back to the parent company Cir S.p.A. For further details, please refer to note 40.

The decrease in amounts “Due to tax authorities for indirect and other taxes” mainly refers to VAT debts.

18. OTHER CURRENT LIABILITIES

“Other current liabilities” for the amount of Euro 9,686 thousand (Euro 8,096 as of December 31, 2014) include adjustments to costs and revenues for the period so as to ensure compliance with the accruals based principle (accrued expenses and deferred income) and advances received from customers for orders still to be delivered. The increase in the item mainly relates to subsidiary Systèmes Moteurs S.A.S. and reflectsadvances paid by customers for research and development projects.


19. LONG-TERM PROVISIONS AND OTHER PAYABLES

These are made up as follows:

Details of the main items are given below.

(in thousands of Euro) 12.31.2015 12.31.2014Pension funds 42,575 47,361Provision for employment termination indemnities 6,316 8,405Provision for restructuring 5,194 19,296Provisions for disputes with tax authorities 202 2,179Provision for phantom stock options 8 - Provision for product warranties and other risks 23,258 25,874Agents' termination indemnities 4 102Lawsuits 1,658 1,109TOTAL 79,215 104,326

Pension funds

The amount of Euro 42,575 thousand represents the amount set aside at year end by the various Group foreign companies to cover the liabilities of their various pension funds. Changes in the pension funds occurred during the year are shown below:

(in thousands of Euro) 12.31.2015 12.31.2014Opening balance 47,361 28,445Cost of benefits charged to income statement 3,941 (153)"Other Comprehensive Income" (7,176) 21,063Contributions paid (2,921) (2,722)Exchange differences 1,370 728TOTAL 42,575 47,361

The following table shows all of the obligations deriving from “Pension funds” and the present value of the plan assets for the year 2015 and the two previous years.

(in thousands of Euro) 12.31.2015 12.31.2014 12.31.2013Present value of defined benefit obligations 221,701 222,291 186,866Fair value of plan assets 179,126 174,930 158,421Deficit 42,575 47,361 28,445Liability recorded to "Long-term provisions" 42,575 47,361 31,321Surplus recorded to "Other receivables" - - (2,876)

Changes in the "Present value of defined benefit obligations" for the year 2015 were as follows:


(in thousands of Euro) 12.31.2015 12.31.2014Present value of defined benefit obligations at the beginning of the period 222,291 186,866Current service cost 1,647 1,769Financial expenses 8,128 8,266Remeasurement (gains)/losses- Actuarial (gains)/losses arising from changes in demographic assumptions (305) (220)- Actuarial (gains)/losses arising from changes in financial assumptions (14,010) 26,351- Actuarial (gains)/losses arising from experience (391) (1,676)- Actuarial (gains)/losses arising from "Other long-term benefits"- Jubilee benefit 164 (1,102)Past service cost - (1,794)Contribution paid by plan participants 227 212Settlements/Curtailments - (860)Exchange differences 12,163 12,053Benefits paid (8,213) (7,574)Present value of defined benefit obligations at the end of the period 221,701 222,291

“Actuarial (gains)/losses arising from changes in financial assumptions” are mainly due to increasing discounting rate in British pension funds.“Actuarial (gains)/losses arising from experience adjustments” reflect the difference between actuarial assumptions and what occurred in practice (for instance, in terms of employee turnover, wage inflation or inflation rate). “Actuarial (gains)/losses relating to other long-term benefits” mainly relate to subsidiary Filtrauto S.A..

With regard to the balances of companies that use functional currencies other than the Euro, please note that the Income Statement items are translated into Euro using the average exchange rate of the reporting period; the present value of obligations at beginning and end of period was translated at the rate of exchange ruling at the relevant date.

Changes in the fair value of plan assets are illustrated in the table below:

(in thousands of Euro) 12.31.2015 12.31.2014

Fair value of plan assets at the beginning of the period 174,930 158,421Interest income 6,675 7,433Remeasurement (gains)/losses:Return on plan assets (7,530) 3,392Non investment expenses (677) (1,001)Contributions paid by the company 1,718 1,447Contributions paid by the plan participants 227 212Settlements/curtailments - - Exchange differences 10,792 11,317Benefits paid (7,009) (6,291)Fair value of plan assets at the end of the period 179,126 174,930


With regard to the balances of companies that use functional currencies other than the Euro, please note that the Income Statement items are translated into Euro using the average exchange rate of the reporting period, whereas the fair value of assets at beginning and end of period was translated at the rate of exchange ruling at the relevant date.

Details of the amounts recognised in “Other comprehensive income” are given below:

(in thousands of Euro) 12.31.2015 12.31.2014Return on plan assets (excluding amounts included innet interests expenses on net liability (assets)) 7,530 (3,392)Actuarial (gains)/losses arising from changes indemographic assumptions (305) (220)Actuarial (gains)/losses arising from changes infinancial assumptions (14,010) 26,351Actuarial (gains)/losses arising from experience (391) (1,676)Value of the net liability (asset) to be recognised in"Other Comprehensive income" (7,176) 21,063

The amounts charged to the Income Statement can be summarised as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Current service cost 1,647 1,769Net interest cost 1,453 833Past service cost - (1,794)Actuarial (gains)/losses recognised during the year on "Other long-term benefits"- Jubilee benefit 164 (1,102)Non-management costs of plan assets 677 1,001Settlements/Curtailments - (860)TOTAL 3,941 (153)

Items “Current service cost”, “Past service cost” and “Non-management costs of plan assets” are included in the various “Labour cost” lines of Income Statement items.Line “Financial expenses, net” is included in “Financial expenses (income), net”.“Actuarial (gains) losses related to jubilee benefits recognized during the year” and “Settlements/Curtailments” are included in “Other non-operating expenses (income)”.

Defined-benefit plans expose the Group to the following actuarial risks:

- Investment risk (only applies to British subsidiaries that hold plan assets): the present value of the defined-benefit obligation is calculated at a discount rate determined with reference to returns on AA-rated Eurozone corporate bonds; if the return on plan assets is lower than this rate, the plan will be in deficit. For this reason, and considering the long-term nature of plan liabilities, the British companies' funds diversified their portfolios to include investment in properties, debt instruments and equity instruments.


- Interest risk: a decrease in the discount rate will lead to an increase in plan liability; however, if plan assets are present, such increase will be partially offset by an increase in the return on plan investments.

- Longevity risk: the value of the defined-benefit obligation is calculated taking into account the best possible estimate of the mortality rate of plan beneficiaries; an increase in life expectancy leads to an increase in the resulting obligation.

- Inflation risk/wage inflation risk: the value of the definite-benefit plan with reference to employees in service is calculated taking into account future pay rises and inflation rate: an increase in these elements causes the relevant obligation to increase.

The following table shows the breakdown of “Pension funds” by geographical area of the relevant subsidiaries:

(in thousands of Euro)Great Britain France Other TOTAL

Present value of defined benefit obligations 196,097 22,536 3,658 222,291Fair value of plan assets 174,858 - 72 174,930Deficit 21,239 22,536 3,586 47,361

(in thousands of Euro)Great Britain France Other TOTAL

Present value of defined benefit obligations 195,409 22,650 3,642 221,701Fair value of plan assets 179,031 - 95 179,126Deficit 16,378 22,650 3,547 42,575

12.31.2014

12.31.2015

Deficit reduction in Great Britain can be traced back mainly to an increase in thediscounting rate.

Note that the actuarial valuations of the “Pension funds” are carried out in collaboration with external specialists.

The following paragraphs summarise the pension systems in the geographical areas that affect the Group the most: Great Britain and France.

Great Britain In Great Britain, pension plans are mainly private, being made with fund management companies and administered independently from the company.They are classified as defined-benefit plans subject to actuarial valuation that are accounted for according to the corridor approach as provided for by IAS 19.With regard to plan governance, administrators are representatives of employees, former employees and employer; they are required by law to act in the interest of the fund and of all main stakeholders and are responsible for the investment policies adopted for plan assets. With regard to the nature of employee benefits, employees are entitled to a post-employment annuity calculated by multiplying a portion of the wage earned at retirement age by the number of years of service until retirement age.

The main assumptions used in the actuarial valuation of these “Pension funds” were as follows:


12.31.2015 12.31.2014Discount rate % 3.9 3.6Expected annual wage rise % 2.2-3.7 2.1-3.6Annual inflation rate % 2.2-3.2 2.1-3.1Retirement age 65 65

The higher “Discount rate” versus the previous year reflects the upward trend in returns on AA-rated UK corporate bonds recorded in 2015. The “Discount rate” is calculated based on the returns on Eurozone AA-rated corporate bonds (average duration of 13 years) adjusted for the longer average duration of the bond (19 years).

Changes in the present value of the UK funds obligation for 2015 and 2014 were as follows:

(in thousands of Euro) 12.31.2015 12.31.2014Present value of defined benefit obligations at the beginning of the period 196,097 158,622Current service cost 269 172Financial expenses 7,481 7,370Remeasurement (gains)/losses:- Actuarial (gains)/losses arising from changes in demographic assumptions - -- Actuarial (gains)/losses arising from changes in financial assumptions (13,825) 25,694- Actuarial (gains)/losses arising from experience - -Past service cost - (1,731)Contribution paid by plan participants 227 212Settlements/Curtailments - -Exchange differences 12,156 12,049Benefits paid (6,996) (6,291)Present value of defined benefit obligations at the end of the period 195,409 196,097

Changes in the fair value of UK plan assets are illustrated in the table below:

(in thousands of Euro) 12.31.2015 12.31.2014

Fair value of plan assets at the beginning of the period 174,858 158,365Interest income 6,668 7,428Remeasurement (gains)/losses:Return on plan assets (7,530) 3,392Non investment expenses (677) (1,001)Contribution paid by the company 1,696 1,430Contribution paid by plan participants 227 212Settlements/Curtailments - -Exchange differences 10,785 11,323Benefits paid (6,996) (6,291)Fair value of plan assets at the end of the period 179,031 174,858


Allocations of the fair value of plan asset based on type of financial instrument were as follows:

12.31.2015 12.31.2014Debt instruments 23.3% 28.2%Equity instruments 32.2% 44.2%Real estate investments 0.3% 0.5%Cash 13.7% 8.6%Derivatives 28.4% 16.8%Other assets 2.1% 1.7%TOTAL 100.0% 100.0%

The fair value of these financial instruments was measured based on quoted prices available in active markets.

Asset allocation at the end of the year 2015 shows an increase in derivative instruments. Such increase reflects a change in the investment strategy aimed at reducing risk, that favours Liability Driven Investment strategies (investment approach that identifies strategic asset allocation based on the liability, albeit implicit, to be hedged). In line with this approach, and in order to improve the efficiency of the investment strategy, investments in derivative instruments were increased to hedge for the exchange, interest rate and inflation risks associated with certain investment strategies.Please note that the fund's dynamic management strategy requires asset allocation to be adjusted to present economic conditions and future expectations.

Debt instruments are mostly foreign corporate securities. Equity instruments are mostly foreign securities (emerging country securities constitute a minimal share ).

The Trustee Board periodically reviews the plan's investment strategies and diversifies them by risk and asset profitability. These strategies take into account the nature and duration of liabilities, the fund's financing needs and the employer's ability to meet the fund's commitments. The fund of subsidiary Sogefi Filtration Ltd uses derivative financial instruments to hedge the risk of changes in liability value connected with inflation, exchange and interest rates.

With regard to the impact of the defined-benefit plan of the UK companies on the Group's future cash flows, expected contributions to the plans for the next year total Euro 1,428 thousand.

Average bond duration as of December 31, 2015 is approximately 19 years.

In compliance with the IAS 19, a sensitivity analysis was performed to determine how the present value of the bond changes as the most significant actuarial assumptions change, other actuarial assumptions being equal.Considering the peculiar operation of UK funds, the following actuarial assumptions are considered significant:- Discount rate- Wage inflation rate- Life expectancy


An overview of the changes in the present value of the obligation triggered by changes in these actuarial assumptions is provided below:

(in thousands of Euro)+1% -1%

Discount rate (31,802) 41,233Rate of salary increase 2,406 (2,170)

(in thousands of Euro)+ 1 year - 1 year

Life expectancy 5,076 (5,125)

12.31.2015

12.31.2015

FrancePensions in France are essentially based on state pension plans and the responsibility of the company is limited to paying the contributions established by law.In addition to this basic assistance guaranteed by the state, retiring employees are also entitled to other additional amounts under collective labour agreements that are determined based on length of service and salary level, and are only paid if the employee reaches retirement age in the company. An employee leaving the company before retirement age will lose these additional benefits.These additional benefits are recognised as a liability for the company and, in accordance with IAS 19, they are considered as defined-benefit plans subject to actuarial valuation.

In addition to the retirement indemnity, a collective labour agreement provides for a “Jubilee benefit” (which is calculated with a different method at each different French subsidiary) that vests upon reaching 20, 30, 35 and 40 years of service with the company. Under the IAS 19, this “Jubilee benefit” falls under the residual category of “Other long-term benefits” and is subject to actuarial valuation; actuarial gains (losses) must be recognised in the Income Statement for that year. Employees will lose the bonus falling due upon the different service jubilee bonuses if they leave the company before reaching the years of service mentioned above.

The main assumptions used in the actuarial valuation of these “Pension funds” were as follows:

12.31.2015 12.31.2014Discount rate % 2.5 2.4Expected annual wage rise % 2.5 2.5Annual inflation rate % 1.8 1.0Retirement age 62-67 62-67

The “Discount rate” is calculated based on the returns on Eurozone AA-rated corporate bonds (average duration of 15 years).

Changes in the "Present value of defined benefit obligations" were as follows:


(in thousands of Euro) 12.31.2015 12.31.2014Present value of defined benefit obligations at the beginning of the period 22,536 24,814Current service cost 1,275 1,529Financial expenses 541 781Remeasurement (gains)/losses:- Actuarial (gains)/losses arising from changes in demographic assumptions (305) (230)- Actuarial (gains)/losses arising from changes in financial assumptions (187) 339- Actuarial (gains)/losses arising from experience (460) (1,716)- Actuarial (gains)/losses related to "Other long-term benefits" - Jubelee benefit 163 (1,099)Settlements/Curtailments - (860)Benefits paid (913) (1,022)Present value of defined benefit obligations at the end of the period 22,650 22,536

“Actuarial (gains)/losses arising from experience adjustments” reflect the difference between actuarial assumptions and what occurred in practice (for instance, in terms of employee turnover, wage inflation or inflation rate).

The sensitivity analysis of the French funds was performed by varying the following actuarial assumptions:- Discount rate- Wage inflation rate

An overview of the changes in the present value of the obligation triggered by changes in these actuarial assumptions is provided below:

(in thousands of Euro)+1% -1%

Discount rate (3,058) 3,528Rate of salary increase 3,406 (3,070)

12.31.2015

Provision for employment termination indemnities

This aspect only concerns the Group's Italian companies, where pensions are represented by state plans and the company's responsibility is limited to regular payment of social contributions each month.In addition to state-provided pensions, employees are entitled by law to a termination indemnity that accrues in accordance with length of service and is paid when an employee leaves the company. The termination indemnity is calculated based on the length of service and taxable remuneration of each employee.The corresponding liability is put aside in a specific provision and the amounts accrued in previous years are subject to annual revaluation based on the official cost-of-life index and at the legal interest rates; it is not associated with any conditions or accrual


periods, nor does it require any financial provision; as a result, there are no assets underlying the provision.This termination indemnity is considered as a defined-benefit provision, but subject to actuarial valuation for the part relating to the expected future benefits in respect of past service (which is the part subject to annual revaluation). Further to the amendments to the “Provision for employment termination indemnities”

introduced by Law 296 of December 27, 2006 and subsequent decrees and regulations issued in the early part of 2007, for companies with 50 or more employees (Sogefi Rejna S.p.A.), the portions of the provision accruing as from January 1, 2007 are transferred -at employee's option - to supplementary pension funds or to the treasury fund held by INPS (the Italian social security authority) or to supplementary pension schemes, and are considered as “defined-contribution plans”. These amounts therefore do not require actuarial valuation and are no longer booked to the “Provision for employment termination indemnities”. The “Provision for employment termination indemnities”

accruing up to December 31, 2006 is still a “defined-benefit plan”, consequently requiring actuarial valuation, which however will no longer take account of the component relating to future wage inflation. In accordance with the IAS 19, for companies with less than 50 employees (Holding Company Sogefi S.p.A.) the provision is entirely accounted for as a “Definite-benefit plan” and is subject to actuarial valuation.

The assumptions taken into consideration when carrying out the actuarial valuation of the “Provision for employment termination indemnities” were as follows:

- Macroeconomic assumptions: 1. annual discount rate (IBoxx Eurozone Corporate AA Index): 1.39% (0.91% as at

December 31, 2014)2. annual inflation rate: 1.5% for 2016, 1.8% for 2017, 1.8% for 2017, 1.7% for 2018,

1.6% for 2019 and 2% from 2020 onward (as at December 31, 2014: 0.6% for 2015, 1.2% for 2016, 1.5% for 2017 and 2018, and 2% from 2019 onward)

3. annual increase in termination indemnity: 2.625% for 2015, 2.85% for 2017, 2.775% for 2018, 2.7% for 2019 and 3.0% from 2020 onward (as at December 31, 2014: 1.95% for 2015, 2.4% for 2016, 2.625% for 2017 and 2018, and 3% from 2019 onward)

- Demographic assumptions:1. rate of voluntary resignations: 3% - 10% of the workforce (same assumptions

adopted as of December 31, 2014); 2. retirement age: it was assumed that employees would reach the first of the

requirements valid for mandatory general social security (same assumptions adopted as of December 31, 2014);

3. probability of death: the RG48 mortality tables produced by the General State Accounting Body were used (same assumptions adopted as of December 31, 2014);

4. probability of advanced settlement: an annual value of 2% - 3% each year was assumed (same assumptions adopted as of December 31, 2014);

5. INPS' table split by age and gender was used for the probability of disability (same assumptions adopted as of December 31, 2014).


The provision changed as follows during the period:

(in thousands of Euro) 12.31.2015 12.31.2014Opening balance 8,405 7,685Accruals for the period (162) 309Amounts recognised in "OtherComprehensive Income" (351) 631Contributions paid (1,576) (220)TOTAL 6,316 8,405

The amounts charged to the Income Statement can be summarised as follows:

(in thousands of Euro) 2015 2014Current service cost 117 120Curtailment (345) -Financial charges 66 189TOTAL (162) 309

Item “Curtailment” includes an adjustment of Euro 345 thousand made to the provision booked in the previous years.

Average bond duration as of December 31, 2015 is approximately 8 years.

The sensitivity analysis of the provision for employment termination indemnities is outlined below: The table below shows the changes in the provision triggered by changes in the following actuarial assumptions:- Discount rate- Wage inflation

(in thousands of Euro)+0,5% -0,5%

Discount rate (211) 223Rate of salary increase 4 (4)

12.31.2015


Provision for restructuring

These are amounts set aside for restructuring operations that have been officially announced and communicated to those concerned, as required by IAS/IFRS.


(in thousands of Euro) 12.31.2015 12.31.2014Opening balance 19,296 16,870Accruals for the period 1,535 11,132Utilisations (14,438) (7,289)Provisions not used during the period (440) (1,138)Other changes (373) (208)Exchange differences (386) (71)TOTAL 5,194 19,296

“Utilisations” (booked as reductions of provisions previously accrued provisions) relate nearly entirely to the French subsidiaries Filtrauto S.A. and Allevard Rejna Autosupensions S.A. and to subsidiary Sogefi Filtration do Brasil Ltda.

Changes in “Accruals for the period” net of the “Provisions not used during the period”

(amounts set aside during previous years in excess of amounts actually paid), total Euro 1,095 thousand; this figure is booked to the Income Statement under “Restructuring costs”.

“Other changes” reflect a reclassification to provision for “Lawsuits”.

Provisions for disputes with tax authorities

This refers to tax disputes under way with local European and South American tax authorities, for which the appropriate provisions have been made, even though the final outcome is not yet certain.


(in thousands of Euro) 12.31.2015 12.31.2014Opening balance 2,179 878Accruals for the period 70 1,430Utilisations (1,482) (117)Provisions not used during the period (500) - Exchange differences (65) (12)TOTAL 202 2,179

“Utilisations” for the year mainly relate to subsidiary Systèmes Moteurs S.A.S. as a result of the settlement of a dispute dating back to the 2009-2011 period.

The “Provisions not used during the period” relate to amounts accrued during previousyears by the European subsidiaries in excess of amounts actually paid.


Provision for phantom stock options

The provision for Phantom Stock Options refers to the fair value measurement of options related to Phantom Stock Option 2007 incentive plan, still in existence, for the Director who filled the post of Managing Director when the plan was issued. The variation of the fair value, negative by Euro 8 thousand, was recognised in the income statement, in item “Directors' and statutory auditors' remuneration” in 2015.

Provision for product warranties


(in thousands of Euro) 12.31.2015 12.31.2014Opening balance 25,874 22,538Accruals for the period 16,520 5,810Utilisations (18,739) (2,658)Provisions not used during the period (17) (85)Other changes (18) 261Exchange differences (362) 8TOTALE 23,258 25,874

The item reflects for the most part liabilities connected with product warranty risks of the Systèmes Moteurs Group. The item also includes minor provisions for product warranties by Group companies and allocations made to provision for specific risks relating to employees and third parties.

With regard to provision for product warranties, there are claims in progress by two customers relating to a defective component supplied by subsidiary Systèmes Moteurs S.A.S. starting from 2010 before and partly after the subsidiary was acquired by the Sogefi Group. The Company believes that the defect was caused by a thermostat manufactured by a supplier of Systèmes Moteurs S.A.S. and in 2012 filed a law suit against that supplier at the French courts seeking indemnity for any damages it might have to pay to its customers.

The court appointed a technical expert to write an expert witness report (expertise) in June 2012. Merit proceedings were suspended pending submission of the expert witness report. The expert established that the defect was caused by the thermostat manufactured by the supplier of Systèmes Moteurs S.A.S..In 2014, the two customers joined the expertise proceedings and petitioned for their damages to be determined in the expert witness report. Their petition was accepted and the expert's assignment was extended accordingly.Previously, both customers had requested an out-of-court settlement for damages. To date, neither customer is involved in any other proceedings.

The customers claimed Euro 122.8 million in damages, mostly relating to past and future campaigns and Euro 65.9 million for damage to reputation and loss of future income.Based on existing proceedings, the Company and its legal counsel deem that there is only a remote possibility that a liability will arise from the latter claim.


With regard to the first amount claimed, each claim was broken down by period of production to reflect the associated production costs. According to the Company's estimates, Euro 60.4 million of the 122.8 million claimed relate to the period before Systèmes Moteurs was purchased by the Sogefi Group, and Euro 26.6 million relate to the 7 following months.The Company has already paid Euro 3 million by issuing debit notes in favour of customers. In addition, the Company paid Euro 18.0 million to the two customers in the first half of 2015. Systèmes Moteurs S.A.S. paid out these amounts to the above mentioned customers on a provisional basis under standstill agreements, without any admission of liability. Such amounts will be adjusted or partly refunded as required when the Court decides on the merits of the case.

As of June 30, 2015, according to general prudence principles, the Company decided to set aside an additional provision of Euro 11.8 million for product warranties. This amount was reviewed in light of the latest developments at the end of 2015. The Company believes that this provision is still adequate.

With regard to the indemnities owed by the seller of Systèmes Moteurs S.A.S. shares, it is worthwhile pointing out that the Sogefi Group entered an indemnification asset totalling Euro 23.4 million in the Consolidated Financial Statements in 2011, because the seller Dayco Europe S.r.l. had provided contractual guarantees relating to defect liability claims existing at the time of the acquisition, including those noted above.As of December 31, 2015, such indemnification asset has been valued according to IFRS 3.57, and is still believed to be recoverable based on the contractual guarantees given by the seller and the considerations outlined above.The Sogefi Group has not booked any such assets after 2011.Sogefi S.p.A. initiated international arbitration proceedings against the seller of Systèmes Moteurs S.A.S.' shares to recover the costs incurred after the SystèmesMoteurs S.A.S. acquisition date, as provided for by the acquisition contract. An arbitration award is expected during the first half of 2016.

It should be noted that these are complex proceedings that involve passing judgement on technical, juridical and commercial matters, and present uncertainties connected with the outcome of the proceedings before the French courts and the arbitration award. Estimates concerning risks provision and the recovery of booked assets are based on the best information available at the time of preparing the financial statements. They are subject to change as events evolve.

Supplementary indemnity reserves for agents and Lawsuits

The provisions changed as follows during the period:


(in thousands of Euro)Agent's termination

indemnities LawsuitsOpening balance 96 985Accruals for the period 6 502Utilisations - (114)Provisions not used during the period - (24)Other changes - (228)Exchange differences - (12)TOTAL 102 1,109

12.31.2014

(in thousands of Euro)Agent's termination

indemnities LawsuitsOpening balance 102 1,109Accruals for the period - 976Utilisations - (392)Provisions not used during the period (98) (284)Other changes - 373Exchange differences - (124)TOTAL 4 1,658

12.31.2015

Amounts stated in the financial statements represent the best possible estimates of liabilitiesat year-end date. Item “Lawsuits” includes litigation with employees and third parties. The allocation of Euro 976 thousand mainly relates to subsidiary Filtrauto S.A. for disputes with employees.

Other payables

“Other payables” amount to Euro 9,195 thousand (Euro 6,988 thousand as of December 31, 2014). The increase in the item mainly relates to subsidiary Systèmes Moteurs S.A.S. and reflects costs incurred in research and development projects charged back to customers that will be accounted for as revenue over the life of the project starting at the time capitalised R&D costs are depreciated.The item includes Euro 6,882 thousand (Euro 6,765 thousand as at December 31, 2014) which reflect the fair value of the liability associated with the exercise price of the put option held by non-controlling shareholders of subsidiary Sogefi M.N.R. Engine Systems India Pvt Ltd with reference to 30% of the share capital of the company resulting from the merger between Sogefi M.N.R. and subsidiary Systèmes Moteurs India Pvt Ltd. The option may be exercised after December 31, 2016. The fair value of such liability represents a reasonable estimate of the option exercise price, and was determined using the method that involves discounted cash flows method, based on the cash flows of the 2016 budget and the projections for 2017-2019 of the affected subsidiary. A discount rate of 16.06% was applied and terminal value was calculated using the “perpetual annuity” approach, assuming a growth rate of 7.6%, consistently with the sector performance in the Indian market.Discount rate was calculated based on weighted average cost of capital and the following parameters (extrapolated from the main financial sources):


- financial structure of the industry: 17.1% (the same as the one used in the impairment test)

- levered beta of the industry: 1.12 (the same as the one used in the impairment test)- risk-free rate: 7.75% (annual average of risk free rates of 10-year Indian securities)- risk premium: 8.4%

20. DEFERRED TAX ASSETS AND LIABILITIES

The following details of deferred tax assets and liabilities are provided in light of the IAS/IFRS disclosure requirements.


Deferred tax assets:Allowance for doubtful accounts 2,552 721 3,273 942Fixed assets amortisation/writedowns 31,744 9,212 31,329 9,750Inventory writedowns 4,421 1,466 5,645 1,865Provisions for restructuring 882 291 9,383 3,169Other provisions - Other payables 78,819 24,454 77,326 23,409Fair value derivative financial instruments 11,473 2,754 16,299 4,483Other 12,371 3,797 17,851 5,669Deferred tax assets for tax losses incurred during the year 5,962 2,009 17,563 4,944

Deferred tax assets for tax losses incurred during previous years 66,338 20,597 53,009 16,895TOTAL 214,562 65,301 231,678 71,126

Deferred tax liabilities:Accelerated/excess depreciation and amortisation 68,490 18,704 72,637 20,119Difference in inventory valuation methods 622 155 758 204Capitalisation of R&D costs 44,785 14,968 46,955 15,796Other 27,044 2,437 32,666 2,745TOTAL 140,941 36,264 153,016 38,864Deferred tax assets (liabilities)net 29,037 32,262

Tax losses carried forward 100,779 32,532 88,670 28,223Temporary differences excluded from the calculation of deferred tax assets (liabilities):

12.31.2015 12.31.2014Amount of temporary differences

Amount of temporary differences

Tax effect Tax effect


The tax effect has been calculated on the basis of the rates applicable in the various countries, which are in line with those of the previous year, except for the tax rate applicable to UK subsidiaries, which decreased from 20% to 19%, and that applicable to Italian companies, which decreased from 27.5% to 24% for deferred tax expected to be reversed starting in 2017.

The decrease in “Deferred tax assets (liabilities), net” compared with December 31, 2014 amounts to Euro 3,225 thousand and differs by Euro 2,920 thousand from the amount shown in the Income Statement under “Income taxes – Deferred tax liabilities (assets)”

(Euro 305 thousand) due to:- movements in financial items that did not have any effect on the income statement and therefore the related negative tax effect amounting to Euro 3,583 thousand has been accounted for as Other comprehensive income (expenses) (negative effect of the fair value of derivatives designated as cash flow hedges was Euro 1,731 thousand; negative effect of actuarial gains/losses arising from the adoption of the IAS 19 was Euro 1,852 thousand); - negative effect of tax losses of previous years reclassified from deferred tax assets toamounts receivable from CIR for Euro 514 thousand (without any impact on the consolidated income statement); this amount reflects the share of tax losses for the year 2014 offset by taxable income generated in 2015 by the CIR Group tax filing system that the Company has joined);- exchange differences with a positive effect of Euro 1,177 thousand.

The decrease in the tax effect relating to item “Provisions for restructuring” mainly arises from the outlay of amounts previously accrued to provisions for restructuring at subsidiary Filtrauto S.A..

The increase in the tax effect relating to item “Other provisions - Other payables” mostly originates from an increase in the liabilities associated with provisions for product warranty risks.

The decrease in the tax effect relating to item “Fair value of derivatives” mainly relates to the Holding Company Sogefi S.p.A. and reflects the increased fair value of CCS contracts as well as the portion of reserve previously booked to Other comprehensive income relating to IRS contracts no longer designated for hedge accounting recognised in Income Statement.

Item “Other” of deferred tax assets includes various types of items, such as for example costs for which tax deduction is deferred (for example, amounts allocated to remuneration accrued in 2015 not yet paid).

“Deferred tax assets for tax losses incurred during the year” relate to the following companies:

- French subsidiaries Allevard Rejna Autosuspensions S.A. for Euro 887 thousand, Systèmes Moteurs S.A.S. for Euro 478 thousand and Filtrauto S.A. for Euro 529 thousand. These taxes were recognised because it is believed to be probable that taxable income will be available in the future against which such tax losses can be utilised;


- subsidiary Sogefi Filtration S.A. for Euro 115 thousand. These taxes were recognised because it is believed to be probable that taxable income will be available in the future against which such tax losses can be utilised.

“Deferred tax assets for tax losses incurred during the year” relate to the Holding Company Sogefi S.p.A. (Euro 3,495 thousand, Euro 4,261 thousand as of December 31, 2014) and to subsidiaries Sogefi Rejna S.p.A. (Euro 49 thousand, accrued in 2014), Allevard Sogefi U.S.A. Inc. (Euro 8,615 thousand; Euro 7,725 thousand as of December 31, 2014: the increase in the amount is due to the effect of exchange rates - the amount in USD is unchanged from 2014, as the deferred tax assets utilised after the positive result in 2015 were compensated for by new deferred tax assets on losses in previous years), Allevard Rejna Autosupensions S.A. (Euro 3,356 thousand; unchanged compared to December 31, 2014), Sogefi Filtration Ltd (Euro 1,737 thousand; Euro 2,284 thousand as of December 31, 2014), Sogefi Filtration S.A. (Euro 2,081 thousand; Euro 2,111 thousand as of December 31, 2014), United Springs S.A.S. (Euro 717 thousand; Euro 872 thousand as of December 31, 2014) and Systèmes Moteurs S.A.S. (Euro 547 thousand, unchanged compared to December 31, 2014). These taxes were recognised because it is believed to be probable that taxable income will be available in the future against which such tax losses can be utilised. Such probability is determined based on the fact that losses have originated under extraordinary circumstances that are unlikely to occur again, such as restructuring plans currently under way or occurred in the past. It should also be noted that the losses incurred by the UK and the Spain subsidiaries can be carried forward indefinitely. The losses of the French subsidiaries can be carried forward indefinitely but the new law passed in 2012 has maintained a limit for the amount that can be utilised each year, making recovery time longer. The losses of the US subsidiary can be carried forward over a period of up to 20 years since they were incurred. The losses of the Holding Company Sogefi S.p.A. and of subsidiary Sogefi Rejna S.p.A. are likely to be recovered taking into account that the companies have joined the CIR Group tax filing system in the past.

Note that the deferred tax assets relating to the “Allowance for doubtful accounts” and to the “Inventory writedowns” include amounts that will mainly be reversed in the twelve months following year end.

Column “Amount of temporary differences” of item “Other” of deferred tax liabilities includes: Euro 21,375 thousand relating to dividends expected to be paid to the French and Canadian subsidiaries in the short term, subject to a 3% and 5% tax rate, respectively, at the time payment; Euro 1,846 thousand relating to the taxed portion of dividends expected to be paid to the French subsidiaries and the Holding Company Sogefi S.p.A. in the short term; other minor items for Euro 3,823 thousand.

As regards the figures shown under "Temporary differences excluded from the calculation of deferred tax assets (liabilities)", deferred tax assets were not booked as, at year end, there was not a probability that they would be recovered. “Tax losses carried forward” mainly relate to subsidiaries Allevard Sogefi U.S.A. Inc. (down from the previous year after they were offset against the positive result of 2015), Allevard Rejna Autosupensions S.A. (portion of losses not recognised in deferred tax assets because it can not be recovered in the specific period of the company's long-term plan), Sogefi


Filtration Ltd (portion of losses not recognised in deferred tax assets because it can not be recovered in the specific period of the company's long-term plan), Sogefi Filtration do Brasil Ltda, Allevard Rejna Argentina S.A., S. ARA Composite S.A.S., Chinese and Indian subsidiaries.

Please note that the deferred tax assets recognised in the previous years by subsidiaries Sogefi Filtration do Brasil Ltda and Allevard Rejna Argentina S.A. were written down (for an amount of approximately Euro 2,900 thousand) in 2015 as they are deemed to be no longer recoverable because of the deteriorated macroeconomic local context.

21. SHARE CAPITAL AND RESERVES

Share capital

The share capital of the Holding Company Sogefi S.p.A. is fully paid in and amounts to Euro 61,681 thousand as of December 31, 2015 (Euro 61,631 thousand as of December 31, 2014), split into 118,618,055 ordinary shares with a par value of Euro 0.52 each.

Share capital increased from Euro 61,631 thousand (split into 118,521,055 shares) to Euro 61,681 thousand (split into 11,618,055 shares) in 2015. All ordinary shares are fully paid up. No shares are encumbered by rights, liens or limitations relating to dividend distribution.

As of December 31, 2015, the Company has 3,252,144 treasury shares in its portfolio, corresponding to 2.74% of share capital.

Movements in the shares outstanding are as follows:

(Shares outstanding) 2015 2014No. shares at start of period 118,521,055 117,222,292No. shares issued for subscription of stock options 97,000 1,298,763No. of ordinary shares as of December 31 118,618,055 118,521,055No. shares issued for subscription of stock options booked to "Other reserves" at December 31, 2013 - -Treasury shares (3,252,144) (3,430,133)No. of shares outstanding as of December 31 115,365,911 115,090,922

The following table shows the changes in the Group’s equity:

286

Soge

fi|2

015

Con

solid

ated

Fin

anci

al S

tate

men

ts –

Exp

lana

tory

and

Sup

plem

enta

ry N

otes

Sh

are

ho

lde

r's

eq

uit

y o

f th

e G

rou

p

(in

thou

sand

s of

Eur

o)Sh

are

capi

tal

Shar

e pr

emiu

m

rese

rve

Res

erve

fo

r tr

easu

ry

shar

es

Tre

asur

y sh

ares

Tra

nsla

tion

re

serv

eL

egal

re

serv

eC

ash

flow

he

dgin

g re

serv

e

Shar

e-ba

sed

ince

ntiv

e pl

ans

rese

rve

Act

uari

al

gain

/los

s re

serv

e

Tax

on

item

s bo

oked

in

Oth

er

Com

preh

ensi

ve

Inco

me

Oth

er

rese

rves

Ret

aine

d ea

rnin

gsN

et r

esul

t fo

r th

e pe

riod

Tot

al

Bal

ance

at

Dec

embe

r 31

, 201

3

60,9

24

11,7

20

8

,592

(8,5

92)

12,

320

4,

603

(27,

660)

(16,

788)

(15,

255)

8

,002

3,2

37

106

,260

21,

124

168,

487

Pai

d sh

are

capi

tal

incr

ease

70

7

1,

942

-

-

-

-

-

-

-

-

(1

26)

-

-

2,5

23A

lloc

atio

n of

201

3 ne

t pr

ofit

:

Leg

al r

eser

ve

-

-

-

-

-

-

-

-

-

-

-

-

-

-

D

ivid

ends

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Ret

aine

d ea

rnin

gs

-

-

-

-

-

-

-

-

-

-

-

21,1

24(2

1,12

4)

-

Rec

ogni

tion

of

shar

e-ba

sed

ince

ntiv

e pl

ans

-

-

-

-

-

852

-

-

-

-

-

-

-

8

52O

ther

cha

nges

-

761

(761

)

761

-

(7

24)

-

-

-

-

-

(3,0

78)

-

(3

,041

)F

air

valu

e m

easu

rem

ent

of c

ash

flow

he

dgin

g in

stru

men

ts:

shar

e bo

oked

to

OC

I

-

-

-

-

-

-

-

(9

,413

)

-

-

-

-

-

(9

,413

)F

air

valu

e m

easu

rem

ent

of c

ash

flow

he

dgin

g in

stru

men

ts:

shar

e bo

oked

to

inco

me

stat

emen

t

-

-

-

-

-

-

-

9

,603

-

-

-

-

-

9

,603

Act

uari

al g

ain/

loss

-

-

-

-

-

-

-

-

(21,

694)

-

-

-

-

(21,

694)

Tax

on

item

s bo

oked

in

Oth

er

Com

preh

ensi

ve I

ncom

e

-

-

-

-

-

-

-

-

-

4,1

46

-

-

-

4

,146

Cur

renc

y tr

ansl

atio

n di

ffer

ence

s

-

-

-

-

-

-

6

,116

-

-

-

-

-

-

6

,116

Net

res

ult

for

the

peri

od

-

-

-

-

-

-

-

-

-

-

-

-

3

,639

3

,639

Bal

ance

at

Dec

embe

r 31

, 201

4

61,6

31

14,4

23

7

,831

(7,8

31)

12,

340

4,

731

(21,

544)

(16,

598)

(36,

949)

12,

148

3,1

11

124

,286

3,

639

161,

218

Pai

d sh

are

capi

tal

incr

ease

5

0

95

-

-

-

-

-

-

-

-

-

-

-

145

All

ocat

ion

of 2

014

net

prof

it:

L

egal

res

erve

-

-

-

-

30

0

-

-

-

-

-

-

(300

)

-

-

Div

iden

ds

-

-

-

-

-

-

-

-

-

-

-

-

-

-

R

etai

ned

earn

ings

-

-

-

-

-

-

-

-

-

-

-

3

,639

(3,6

39)

-

R

ecog

niti

on o

f sh

are-

base

d in

cent

ive

plan

s

-

-

-

-

-

6

42

-

-

-

-

-

-

-

642

Fai

r va

lue

mea

sure

men

t of

em

bedd

ed

deri

vati

ve (

conv

ersi

on o

ptio

n)

-

-

-

-

-

-

-

-

-

-

9,0

90

-

-

9

,090

Oth

er c

hang

es

-

40

6(4

06)

40

6

-

(712

)

-

-

-

-

-

202

-

(1

04)

Fai

r va

lue

mea

sure

men

t of

cas

h fl

ow

hedg

ing

inst

rum

ents

: sh

are

book

ed t

o O

CI

-

-

-

-

-

-

-

1,3

36

-

-

-

-

-

1,3

36F

air

valu

e m

easu

rem

ent

of c

ash

flow

he

dgin

g in

stru

men

ts:

shar

e bo

oked

to

inco

me

stat

emen

t

-

-

-

-

-

-

-

3

,495

-

-

-

-

-

3

,495

Act

uari

al g

ain/

loss

-

-

-

-

-

-

-

-

7,5

27

-

-

-

-

7,5

27

Tax

on

item

s bo

oked

in

Oth

er

Com

preh

ensi

ve I

ncom

e

-

-

-

-

-

-

-

-

-

(3

,583

)

-

-

-

(3,5

83)

Cur

renc

y tr

ansl

atio

n di

ffer

ence

s

-

-

-

-

-

-

(10,

043)

-

-

-

-

-

-

(10,

043)

Net

res

ult

for

the

peri

od

-

-

-

-

-

-

-

-

-

-

-

-

1

,120

1

,120

Bal

ance

at

Dec

embe

r 31

, 201

5

61,

681

1

4,92

4

7,42

5(7

,425

)

1

2,64

0

4,6

61(3

1,58

7)(1

1,76

7)(2

9,42

2)

8,

565

12,2

01

127

,827

1

,120

170

,843


Share premium reserveIt amounts to Euro 14,924 thousand compared with Euro 14,423 thousand in the previous year.The increase by Euro 95 thousand accounts for share subscriptions under stock option plans.In 2015, the Holding Company Sogefi S.p.A. credited Euro 406 thousand to the Share premium reserve after the free grant of 177,989 treasury shares to 2011, 2012 and 2013 Stock Grant beneficiaries.

Treasury sharesItem “Treasury shares” reflects the purchase price of treasury shares. Movements during the year amount to Euro 406 thousand and reflect the free grant of 177,989 treasury shares as reported in the note to “Stock-based incentive plans reserve”.

Translation reserveThis reserve is used to record the exchange differences arising on the translation of foreign subsidiaries' financial statements.Movements in the period show a decrease of Euro 10,043 thousand mainly attributable to the depreciation of Argentine peso, Brazilian real and Canadian dollar against the Euro.

Reserve for actuarial gains/lossesThis reserve reflects the net impact of the application of the amendment to IAS 19 “Employee Benefits” on other actuarial gains (losses) as at January 1, 2012. The item also includes actuarial gains and losses accrued after January 1, 2012 and recognisedunder Other Comprehensive Income.

Cash flow hedging reserveThis reserve has changed as a result of accounting for the cash flows deriving from instruments that for IAS 39 purposes are designated as “cash flow hedging instruments”.Changes during the period show an increase of Euro 4,831 thousand which breaks down as follows:

- increase of Euro 1,901 thousand as a consequence of the change after December 31, 2014 in the fair value of the existing effective hedging contracts;

- increase of Euro 2,930 thousand reflecting the portion of reserve relating to contracts no longer in hedge accounting that will be recognised in the Income Statement over the same period of time as the differentials relating to the underlying hedged item.

Stock-based incentive plans reserveThe reserve refers to credit to equity for stock-based incentive plans, assigned to Directors, employees and co-workers, resolved after November 7, 2002, including the portion relating to the stock grant plan approved in 2015. In 2015, further to Stock Grant Plan beneficiaries exercising their rights and due to the corresponding free grant of 177,989 treasury shares, the amount of Euro 393 thousand, corresponding to the fair value at right (Unit) allocation date, was reclassified from “Stock- based incentive plans reserve” increasing the “Share premium reserve” (for Euro 406 thousand) and decreasing “Retained earnings reserve” (for Euro 13 thousand).


In 2015, the amount of Euro 319 thousand was reclassified in “Retained earnings reserve” after stock option plans expired and the 2011 stock grant plan was cancelled because the Performance Units did not meet market conditions.While the increase by Euro 642 thousand refers to the cost of accruing plans.

Other reservesThis item amounts to Euro 12,201 thousand (Euro 3,111 thousand as of December 31, 2014).

Upon the decision of the Board of Directors of January 19, 2015 and the execution of a formal waiver (Deed Poll), subject to the British law, on January 28, 2015 (notified to the agent on January 29, 2015), the Holding Company Sogefi S.p.A. has unilaterally waived its right to refund the convertible bonds in cash rather than ordinary shares in case of the conversion right being exercised under the bond issue regulations. This waiver is final, unconditional and irrevocable. The matter of the waiver to this right has a similar effect, under the British law, to an amendment to the bond issue regulations. The Holding Company Sogefi S.p.A. reviewed the liability-equity classification of the option made upon initial recognition of the option (because the call option rights granted to the Company were waived irrevocably, finally and unconditionally). As a result, the Holding Company Sogefi S.p.A. reclassified the fair value of the option of Euro 9,090 thousand (calculated based on the same model applied on December 31, 2014) from “Other medium/long-term liabilities for derivative financial instruments” to "Other reserves – convertible debt equity components".

Retained earnings These totalled Euro 127,827 thousand and include amounts of profit that have not been distributed.The increase of Euro 202 thousand refers to the following events:

- the interest held by subsidiary Allevard Rejna Autosuspensions S.A. in subsidiary Allevard IAI Suspensions Pvt Ltd. increased from 73.91% to 74.23% through a share capital increase not subscribed by non-controlling interests that led to an amount of Euro 7 thousand being reclassified between non-controlling interests and Group's shareholders' equity;

- the interest held by subsidiary Allevard Rejna Autosuspensions S.A. in S.ARA Composite S.A.S. increased from 95% to 90.91% through a share capital increase not subscribed by non-controlling interests that led to an amount of Euro 97 thousand being reclassified between non-controlling interests and Group's shareholders' equity;

- reclassification of the above mentioned "Stock-based incentive plans reserve" as outlined above (Euro 306 thousand).

Tax on items booked in Other Comprehensive IncomeThe table below shows the amount of income taxes relating to each item of Other Comprehensive Income:


(in thousands of Euro)Gross value

Taxes Net value Gross value

Taxes Net value

- Profit (loss) booked to cash flow hedging reserve 4,831 (1,731) 3,100 190 5,316 5,506 - Actuarial gain (loss) 7,527 (1,852) 5,675 (21,698) (1,170) (22,868) - Profit (loss) booked to translation reserve (9,834) - (9,834) 6,837 - 6,837 - Total Profit (loss) booked in Other Comprehensive Income 2,524 (3,583) (1,059) (14,671) 4,146 (10,525)

2015 2014

Tax constraints applicable to certain reserves

The equity of Holding Company Sogefi S.p.A. includes Reserves under tax suspension and its share capital is subject to constraints under tax suspension after revaluation reserves were utilised in the past, for a total amount of Euro 24,164 thousand. The Holding Company has made no allocations for deferred tax liabilities to such reserves, that, if distributed, would count towards taxable income of the Company, because it is not deemed likely that they will be distributed.

Non-controlling interests

The balance amounts to Euro 19,553 thousand and refers to the portion of shareholders' equity attributable to non-controlling interests.

The reserve increased by Euro 104 thousand during the year (decrease is booked to “Other changes” in the “Consolidated Statement of Changes in Equity”) traced back to the above mentioned changes in the interest held in subsidiaries S.ARA Composite S.A.S. (Euro 97 thousand) and Allevard IAI Suspensions Pvt Ltd. (Euro 7 thousand).

Details of non-controlling interests are given below:


Subsidiary's name Region 12.31.2015 12.31.2014 12.31.2015 12.31.2014 12.31.2015 12.31.2014S.ARA Composite S.A.S. France 5.00% 6.29% (159) (116) 463 524Iberica de Suspensiones S.L. Spain 50.00% 50.00% 4,239 4,103 15,557 15,417Shanghai Allevard Spring Co., Ltd China 39.42% 39.42% (74) 209 3,003 3,138Allevard IAI Supensions Pvt Ltd India 25.77% 26.09% (80) (136) 461 425Sogefi M.N.R. Filtration India Pvt Ltd India 30.00% 40.00% - 696 - -Other 0.12% 0.12% 5 - 69 64TOTAL 3,931 4,756 19,553 19,568

% owned by third partiesLoss (proftt) attributable to

non-controlling interestsShareholders' equity attributable

to non-controlling interests

As required by IFRS 12, an overview of the key financial indicators of the companies showing significant non-controlling interests:



Company

12.31.2015 12.31.2014 12.31.2015 12.31.2014 12.31.2015 12.31.2014

Current Assets 5,380 5,635 35,232 33,412 21,304 13,398Non-current Assets 3,667 3,729 9,060 9,767 13,211 10,629Current Liabilities 1,150 1,129 12,302 12,169 15,990 10,969Non-current Liabilities - - 877 174 4,315 3,183Shareholders' equity attributable to the HoldingCompany 4,894 5,097 15,557 15,418 17,995 5,918Non-controlling interests 3,003 3,138 15,557 15,417 - 3,945

- - - - - -Sales Revenue 4,175 6,189 68,685 64,331 37,790 27,064Variable cost of sales 2,462 3,626 41,223 38,638 26,262 18,732Other variable costs of sales 272 423 4,706 3,940 1,009 713Fixed expenses 1,570 1,445 10,693 10,568 5,439 4,011Non-operating expenses (income) 28 20 805 246 678 103Income taxes 29 145 2,779 2,731 (3) 955Income (loss) for the period (186) 530 8,479 8,208 4,405 2,550

Income (loss) attributable to the Holding Company (113) 320 4,240 4,104 3,739 1,286Income (loss) attributable to non-controllinginterests (74) 209 4,239 4,103 - 696Income (loss) for the period (187) 529 8,479 8,207 3,739 1,982

OCI attributable to the Holding Company 279 483 - - (3,239) 557

OCI attributable to non-controlling interests 181 314 - - - 364OCI for the period 460 797 - - (3,239) 403

Total income (losses) attributable to the HoldingCompany 166 803 4,240 4,104 500 1,843Total income (losses) attributable to non-controllinginterests 107 523 4,239 4,103 - 1,060Total income (losses) for the period 273 1,326 8,479 8,207 500 2,385

Dividends paid to non-controlling interests 241 97 4,100 2,500 - -

Net cash inflow (out flow) from operating activities 881 1,200 11,645 10,568 3,215 2,964

Net cash inflow (out flow) from investing activities (84) (316) 1,801 (1,515) (2,818) (3,417)

Net cash inflow (out flow) from financing activities (612) (857) (8,200) (5,000) (221) 181

Net cash inflow (out flow) 185 27 5,246 4,053 176 (272)

Shanghai Allevard Spring Co., Ltd Iberica de Suspensiones S.L. Sogefi M.N.R. Filtration India Pvt Ltd


22. ANALYSIS OF THE NET FINANCIAL POSITION

The following table provides details of the net financial position as required by Consob in its communication no. DEM/6064293 of July 28, 2006 with a reconciliation of the net financial position shown in the table included in the Report on operations:

(in thousands of Euro) 12.31.2015 12.31.2014A. Cash 121,892 124,033B. Other cash at bank and on hand (held to maturity investments) 3,949 6,953C. Financial instruments held for trading 17 18D. Liquid funds (A) + (B) + (C) 125,858 131,004E. Current financial receivables 2,369 2,519F. Current payables to banks 17,843 13,426G. Current portion of non-current indebtedness 74,445 64,509H. Other current financial debts 325 350I. Current financial indebtedness (F) + (G) + (H) 92,613 78,285J. Current financial indebtedness, net (I) - (E) - (D) (35,614) (55,238)K. Non-current payables to banks 141,080 131,617L. Bonds issued 208,869 194,809M. Other non-current financial debts 21,110 22,763N. Convertible bond embedded derivative liability - 10,540O. Non-current financial indebtedness (K) + (L) + (M) + (N) 371,059 359,729P. Net indebtedness (J) + (O) 335,445 304,491

Non-current financial receivables 13,156 157Financial indebtedness, net including non-current financial receivables (as per the "Net financial position" included in the Report on operations) 322,289 304,334

Details of the covenants applying to loans outstanding at year end are as follows (see note 16 for further details on loans): - loan of Euro 60,000 thousand from Intesa Sanpaolo S.p.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less than or equal to 3.5; - loan of Euro 15,000 thousand from Banco do Brasil S.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less than or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - loan of Euro 20,000 thousand from Mediobanca S.p.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - loan of Euro 50,000 thousand from Unicredit S.p.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - loan of Euro 55,000 thousand from BNP Paribas S.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less than or equal to


3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - loan of Euro 30,000 thousand from Société Générale S.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - loan of Euro 20,000 thousand from Mediobanca S.p.A.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - loan of Euro 30,000 thousand from Ing Bank N.V.: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - bond issue of USD 115,000 thousand: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less than or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4; - bond issue of Euro 25,000 thousand: the ratio of consolidated net financial position to consolidated normalised EBITDA has to be less than or equal to 3.5; the ratio of consolidated normalised EBITDA to consolidated net financial expenses must not be less than 4.

As of December 31, 2015, the Company was in compliance with these covenants.


D) NOTES ON THE MAIN INCOME STATEMENT ITEMS: INCOME STATEMENT

23. SALES REVENUES

Revenues from sales and services

The Sogefi Group recorded revenues for Euro 1.5 billion, up 11.1% (+9.1% exchange rates being equal) thanks to the positive performance of all business units and all geographical areas except for Latin America.

Revenues from the sale of goods and services are as follows:

(in thousands of Euro)Amount % Amount %

Air&Cooling 409,281 27.3 374,312 27.7Suspensions 558,015 37.2 506,609 37.5Filtration 536,443 35.8 473,724 35.2Intercompany eliminations (4,689) (0.3) (5,254) (0.4)TOTAL 1,499,050 100.0 1,349,391 100.0

2015 2014

In 2015, all business units achieved significant revenue growth. Suspensions sales increased by 10.1% (+9.2% exchange rates being equal) over the previous year, as they benefited from a positive turn in car-related business in Europe and a growing market share in South America. The sales of the Filtration business unit increased by 13.2% (+10% exchange rates being equal) during 2015, driven by growth in North America and by the original equipment business in Europe. The sales of the Air&Cooling business unit grew by 9.3% over 2014 (+7.5% exchange rates being equal), boosted by the increased market share in North America.

By geographical area of "destination":

(in thousands of Euro)Amount % Amount %

Europe 943,796 63.0 872,100 64.6Mercosur 174,487 11.6 181,362 13.5Nafta 264,120 17.6 207,331 15.4Asia 111,135 7.4 82,662 6.1Rest of the World 5,512 0.4 5,936 0.4TOTAL 1,499,050 100.0 1,349,391 100.0

2015 2014

The impact of non-European countries on total revenues rose to 37% in 2015 (35.4% in 2014), up 1.6 percentage points thanks to the good performance in North America and Asia, which more than compensated for the sluggish performance of South American markets. Market recovery in Europe – Sogefi's largest market – propelled revenues by 8.2% in


2015, thanks to the positive performance of all business areas. Sogefi recorded better market performance in North America thanks to its positioning towards local auto makers.In South America, revenues for the year dropped by 3.8% (+2.8% exchange rates being equal) in spite of a 20.5% downturn in the market, thanks to the positive contribution of the Suspensions business. In 2015, revenues in Asia increased by 34.4% (18.7% exchange rates being equal).

24. VARIABLE COST OF SALES


(in thousands of Euro) 2015 2014Materials 805,668 719,564Direct labour cost (*) 123,118 112,898Energy costs 38,163 35,775Sub-contracted work 37,591 26,357Ancillary materials 20,338 18,454Variable sales and distribution costs (*) 50,655 43,250Royalties paid to third parties on sales 5,223 4,453Other variable costs (1,627) (732)TOTAL 1,079,129 960,019

(*) The reclassification of certain cost items was reviewed in 2015. The following 2014 balances were reclassified to allow for a comparison:

� Euro 5,400 thousand were reclassified from “Variable sales and distribution costs” to “Other non-operating expenses (income)” reflecting an allocation made to Provision for product warranties;

� Euro 1,393 thousand were reclassified from “Direct labour cost” to “Labour cost” of item “Manufacturing and R&D overheads”; Euro 389 thousand were reclassified from “Direct labour cost” to “Labour cost” of item “Distribution and sales fixed expenses” after the allocation between overheads and variable costs was reviewed.

Pressure on margins increased during 2015, and this enhanced the impact of variable costs on sales revenues, which rose from 71.1% in 2014 to 72% in 2015.

“Other variable costs” represent the effect generated by direct labour cost and fixed cost associated with the increase in the inventory of finished goods or semi-finishedproducts.


25. MANUFACTURING AND R&D OVERHEADS

These can be broken down as follows:

(in thousands of Euro) 2015 2014Labour cost (*) 108,965 104,060Materials, maintenance and repairs 31,050 27,044Rental and hire charges 10,189 9,301Personnel services 8,506 7,544Technical consulting 7,157 4,360Sub-contracted work 1,674 2,215Insurance 2,862 2,531Utilities 4,779 4,207Capitalization of internal construction costs (28,596) (31,562)Other (541) (906)TOTAL 146,045 128,794


- Euro 1,393 thousand were reclassified from “Direct labour cost” of item “Variable cost of sales” to “Labour cost” after the allocation between overheads and variable costs was reviewed.

“Manufacturing and R&D overheads” show an increase of Euro 17,251 thousand. Exchange rates being equal, this item would have increased by Euro 15,404 thousand.

The most significant changes are discussed below:The increase by Euro 4,905 thousand in “Labour cost” is mainly traced back to the following factors:

- increase of approximately Euro 1,780 thousand for subsidiary Systèmes Moteurs S.A.S. as a result of an increase in workforce due to new Research and Development projects;

- increase of approximately Euro 1,162 thousand for the Chinese subsidiary Sogefi (Suzhou) Auto Parts Co. Ltd mainly due to business growth;

- increase of approximately Euro 965 thousand in the costs incurred by the USsubsidiary Sogefi Engine Systems USA, Inc due to an increase in workforce due to new research and development projects.

“Materials, maintenance and repairs” grew by Euro 4,006 thousand, mainly pertaining to subsidiary Systèmes Moteurs S.A.S, the European subsidiaries of the Suspensions business unit and subsidiary Allevard Rejna Argentina S.A..

“Rental and hire charges” increased by Euro 888 thousand. This increase is mainly due to subsidiary Sogefi Filtration do Brasil Ltda relocating production to a new plant and still paying the rent for the old plant for a certain period of time.

“Personnel services” increased by Euro 962 thousand mainly in the subsidiaries Systèmes Moteurs S.A.S, Sogefi Filtration d.o.o. and Sogefi (Suzhou) Auto Parts Co. Ltd.


“Technical consulting” grew by Euro 2,797 thousand for the most part due to increased quality control costs incurred by the French subsidiary Systèmes Moteurs S.A.S..

“Sub-contracted work” decreased by Euro 541 thousand as Research and Development entered into less temporary employment contracts.

“Other” shows a negative balance because it includes the Research and Development grants obtained mainly by the French subsidiaries.

Item “Capitalization of internal construction costs” mainly reflects product development costs capitalised when their future benefit is deemed to be reasonably certain.

Total costs for Research and Development (not reported in the table) excluding capitalization amount to Euro 35,532 thousand (stable at 2.4% of sales).

26. DEPRECIATION AND AMORTISATION


(in thousands of Euro) 2015 2014Depreciation of tangible fixed assets 37,082 35,328of which: assets under finance leases 1,200 1,071Amortisation of intangible assets 27,289 22,675TOTAL 64,371 58,003

Item “Depreciation and amortisation” amounts to Euro 64,371 thousand and increased by Euro 6,368 thousand compared to the previous year. Exchange rates being equal, the increment would have been Euro 4,953 thousand.

Depreciation of tangible assets amounts to Euro 37,082 thousand, and shows an increase of Euro 1,754 thousand compared to 2014, of which Euro 912 thousand reflect the effect of exchange rates.

Amortisation of intangible assets increased by Euro 4,614 thousand. Exchange rates being equal, it would have increased by Euro 4,041 thousand, of which Euro 933 thousand relate to the amortisation of the new Group information system in the Holding Company Sogefi S.p.A., whereas the remaining portion reflects R&D costs.


27. DISTRIBUTION AND SALES FIXED EXPENSES

This item is made up of the following main components:

(in thousands of Euro) 2015 2014Labour cost (*) 27,061 25,318Sub-contracted work 6,505 5,874Advertising, publicity and promotion 4,269 3,857Personnel services 3,263 3,228Rental and hire charges 1,838 1,775Consulting 1,160 1,204Other 1,102 577TOTAL 45,198 41,833


- Euro 389 thousand were reclassified from “Direct labour cost” of item “Variable cost of sales” to “Labour cost” after the allocation between overheads and variable costs was reviewed.

“Distribution and sales fixed expenses” increased by Euro 3,365 thousand compared to the previous year. Exchange rates being equal, this item would have increased by Euro 2,951 thousand.

The increase by Euro 1,743 thousand in “Labour cost” is mainly traced back to the following factors:

- increase in the workforce of subsidiary Sogefi Engine Systems USA, Inc.- expansion of the sales organisation of French subsidiary Filtrauto S.A..

The increase in items “Sub-contracted work” (by Euro 631 thousand) is connected with an external warehouse taken on lease by subsidiary Systèmes Moteurs S.A.S., Lpdn GmbH and Sogefi (Suzhou) Auto Parts Co., Ltd.

“Advertising, publicity and promotion” increased by Euro 412 thousand due to new advertising campaigns addressed to the aftermarket segment.

Lastly, the item “Other” increased by Euro 525 thousand as subsidiary Sogefi Filtration do Brasil Ltda took an external warehouse on lease for its aftermarket business.


28. ADMINISTRATIVE AND GENERAL EXPENSES

These can be broken down as follows:

(in thousands of Euro) 2015 2014Labour cost 38,496 37,712Personnel services 4,870 5,862Maintenance and repairs 1,427 1,972Cleaning and security 1,812 2,007Consulting 5,699 9,794Utilities 3,478 3,367Rental and hire charges 3,903 4,136Insurance 1,856 1,449Participation des salaries 524 699Administrative, financial and tax-related services provided by Parent Company 850 1,350Audit fees and related expenses 1,622 1,409Directors' and statutory auditors' remuneration 774 1,612Sub-contracted work 461 639Capitalization of internal construction costs (1,867) (7,204)Other 8,379 6,151TOTAL 72,284 70,955

“Administrative and general expenses” increased by Euro 1,329 thousand compared to 2014, which would have been Euro 254 thousand exchange rates being equal.

The increase in “Labour cost”, for the amount of Euro 784 thousand, mainly reflects newly hired workforce in the IT department engaged in the management of IT systems at subsidiary Filtrauto S.A. and an increase in workforce at subsidiary Sogefi Engine Systems USA, Inc.

The decrease in item “Personnel services” for the amount of Euro 992 thousand mainly refers to travel expenses incurred by subsidiaries Filtrauto S.A. and Systèmes Moteurs S.A.S. and by the Holding Company Sogefi S.p.A., also due to the decreased workforce of the Holding Company.

“Maintenance and repairs” decreased by Euro 545 thousand, mainly thanks to lower maintenance costs incurred in the IT departments of subsidiaries Filtrauto S.A. and Allevard Rejna Autosospensions S.A..

The decrease in item “Consulting” by Euro 4,140 thousand mainly refers to the French subsidiary Filtrauto S.A. and reflects a lower level of services by third parties in the IT area as well as lower administrative and fiscal consulting expenses incurred by the Holding Company Sogefi S.p.A. compared to 2014.

The integrated Group information system also resulted in decreased “Capitalization of internal construction costs” – by Euro 5,337 thousand – relating to the Holding Company Sogefi S.p.A. for lower capitalised assets compared to the previous year.Item “Insurance” increased by Euro 407 thousand, mostly due to Group risk coverage.


Services provided by the parent company CIR S.p.A. amounted to Euro 850 thousand (Euro 1,350 thousand in 2014). As part of its activity, Sogefi S.p.A. makes use of the services provided by CIR S.p.A., its Parent Company, in areas such as strategic development, disposals and acquisitions, and services of an administrative, financial, fiscal and corporate nature.

“Directors' and statutory auditors' remuneration” decreased by Euro 838 thousand; this is mostly traced back to the Holding Company Sogefi S.p.A., that had incurred higher non-recurring expenses when the Director who acted as Managing Director at the date of issue of the relevant plan exercised the 2008 Phantom Stock option plan in 2014.

The increase in “Other” of Euro 2,228 thousand reflects other overheads and administrative costs incurred for the most part by subsidiaries Sogefi Engine SystemsUSA, Inc. and Filtrauto S.A.. Please note also that the 2014 balance included a benefit arising when a provision for risk of the German subsidiary LDPN GmbH was decreased by Euro 290 thousand.

29. PERSONNEL COSTS

Personnel

Regardless of their destination, “Personnel costs” as a whole can be broken down as follows:

(in thousands of Euro) 2015 2014Wages, salaries and contributions 293,194 276,834Pension costs: defined benefit plans 2,441 1,096Pension costs: defined contribution plans 2,018 2,026Participation des salaries 524 699Imputed cost of stock option and stock grant plans 642 852Other costs 332 334TOTAL 299,151 281,841

“Personnel costs” increased by Euro 17,310 thousand (+6.1%) compared to the previous period. Exchange rates being equal, “Personnel costs” would have increased by Euro13,344 thousand (+4.7%).

The impact of “Personnel costs” on sales revenues falls from 20.9% in the previous year to 19.9% in the current year.

“Wages, salaries and contributions”, “Pension costs: defined benefit plans” and “Pension costs: defined contribution plans” are posted in the tables provided above at lines “Labour cost” and “Administrative and general expenses”.

“Participation des salaries” is included in “Administrative and general expenses”.

“Other costs” is included in “Administrative and general expenses”.


“Imputed cost of stock option and stock grant plans” is included in “Other non-operating expenses (income)”. The following paragraph “Personnel benefits” provides details of the stock option and stock grant plans.

The average number of Group employees, broken down by category, is shown in the table below:

(Number of employees) 2015 2014Managers 99 105Clerical staff 1,849 1,838Blue collar workers 4,783 4,840TOTAL 6,731 6,783

Personnel benefits

Sogefi S.p.A. implements stock-based incentive plans for the Managing Director of the Company and for employees of the Company and of its subsidiaries that hold important positions of responsibility within the Group. The purpose is to foster greater loyalty to the Group and to provide an incentive that will raise their commitment to improving business performance and generating value in the long term.

The stock-based incentive plans of Sogefi S.p.A. are first approved by the Shareholders’

Meeting.

Except as outlined at the following paragraphs “Stock grant plans”, “Stock option plans”

and “Phantom stock option plans”, the Group has not carried out any other transaction that involves the purchase of goods or services with payments based on shares or any other kind of instrument representing portions of equity. As a result, it is not necessary to disclose the fair value of such goods or services. In addition to the plan issued in 2015, The Group has issued plans from 2005 to 2014 of which the main details are provided blow.

Stock grant plans The stock grant plans provide for the free assignment of conditional rights (called units) that cannot be transferred to third parties or other beneficiaries; each of them entitles to the free assignment of one Sogefi S.p.A. share. There are two categories of rights under these plans: Time-based Units, that vest upon the established terms and Performance Units, that vest upon the established terms provided that shares have achieved the target price value established in the regulation. The regulation provides for a minimum holding period during which the shares held for the plan can not be disposed of. All shares assigned under these plans will be treasury shares held by Sogefi S.p.A.. According to the regulation, a pre-condition for assigning the shares is a continued employer-employee relationship or the continued appointment as a director/executive of the Company or one of its subsidiaries throughout the vesting period of the rights.

On October 23, 2015, the Board of Directors executed the 2015 stock grant plan approved by the Shareholders’ Meeting on April 20, 2015 to assign a maximum of


1,500,000 conditional rights, restricted to employees of the Company and its subsidiaries, who were assigned a total of 441,004 Units (190,335 of which were Time-based Units and 250,669 Performance Units).Time-based Units will vest in tranches on a three-monthly basis, accounting for 12.5% of their respective total, starting on October 20, 2017 and ending on July 20, 2019. Performance Units will vest at the same vesting dates established for Time-based Units, provided that the increase in price value of Sogefi S.p.A. shares at each vesting date is higher than the increase of the Sector Index (as defined in the Regulation) at that date.

The fair value of the rights assigned during 2015 has been determined at the time the rights were assigned using the binomial option pricing model (so-called Cox, Ross and Rubinstein model) for US options and amounts to Euro 833 thousand overall.

Input data used for measuring the fair value of the 2015 stock grant plan are provided below: - curve of EUR/GBP/SEK/CHF-riskless interest rates as of October 23, 2015; - prices of the underlying (equal to price of Sogefi S.p.A. share as of October 23, 2015, and equal to Euro 2.206) and of the securities included in the benchmark basket, again as of October 23, 2015; - standard prices of Sogefi S.p.A. share and of the securities included in the benchmark basket during the period starting on September 22, 2015 and ending on October 22, 2015 for the determination of the stock grant Performance Units limit; - historical volatility rate of stock and exchange rates during 260 days, as of October 23, 2015; - null dividend yield for stock grant valuation; - historical series of the logarithmic returns of involved securities and EUR/GBP, EUR/SEK and EUR/CHF exchange rates to calculate the correlation among securities and among the three non-EUR denominated securities and associated exchange rates (to adjust for estimated trends), calculated for the period starting on October 23, 2014 and ending on October 23, 2015.

The main characteristics of the stock grant plans approved during previous years and still under way are outlined below:

• 2011 stock grant plan to assign a maximum of 1,250,000 conditional rights, restricted to the Director who filled the post of Managing Director of the Holding Company at the date of issue of the relevant plan and to employees of the Company and its subsidiaries, who were assigned a total of 757,500 Units (320,400 of which were Time-based Units and 437,100 Performance Units).Time-based Units will vest in tranches on a three-monthly basis, accounting for 12.5% of their respective total, starting on April 20, 2013 and ending on January 20, 2015. Performance Units will vest at the same vesting dates established for Time-based Units, provided that the price value of shares at vesting date is at least equal to the percentage of the initial value indicated in the regulation. • 2012 stock grant plan to assign a maximum of 1,600,000 conditional rights, restricted to the Director who filled the post of Managing Director of the Holding Company at the date of issue of the relevant plan and to employees of the Company and its subsidiaries,


who were assigned a total of 1,152,436 Units (480,011 of which were Time-based Units and 672,425 Performance Units). Time-based Units will vest in tranches on a three-monthly basis, accounting for 12.5% of their respective total, starting on April 20, 2014 and ending on January 31, 2016. Performance Units will vest at the same vesting dates established for Time-based Units, provided that the increase in price value of Sogefi S.p.A. shares at each vesting date is higher than the increase of the Sector Index (as provided for by the Regulation) at that date. • 2013 stock grant plan to assign a maximum of 1,700,000 conditional rights, restricted to employees of the Company and its subsidiaries, who were assigned a total of 1,041,358 Units (432,434 of which were Time-based Units and 608,924 Performance Units).Time-based Units will vest in tranches on a three-monthly basis, accounting for 12.5% of their respective total, starting on April 20, 2015 and ending on January 31, 2017. Performance Units will vest at the same vesting dates established for Time-based Units, provided that the increase in price value of Sogefi S.p.A. shares at each vesting date is higher than the increase of the Sector Index (as provided for by the Regulation) at that date. • 2014 stock grant plan to assign a maximum of 750,000 conditional rights, restricted to employees of the Company and its subsidiaries, who were assigned a total of 378,567 Units (159,371 of which were Time-based Units and 219,196 Performance Units).Time-based Units will vest in tranches on a three-monthly basis, accounting for 12.5% of their respective total, starting on April 20, 2016 and ending on January 20, 2018. Performance Units will vest at the same vesting dates established for Time-based Units, provided that the increase in price value of Sogefi S.p.A. shares at each vesting date is higher than the increase of the Sector Index (as provided for by the Regulation) at that date.

The imputed cost for 2015 for existing stock grant plans is Euro 642 thousand, and is booked to the Income Statement under “Other non-operating expenses (income)”.

The following table shows the total number of existing rights with reference to the 2011-2015 plans:

2015 2014

Not exercised/not exercisable at the start of the year 2,024,255 2,483,088Granted during the year 441,004 378,567Cancelled during the year (409,398) (504,125)Exercised during the year (177,989) (333,276)

Not exercised/not exercisable at the end of the year 1,877,871 2,024,254Exercisable at the end of the year 391,558 247,203

The line “Not exercised/not exercisable at the end of the period” refers to the total number of options, net of those exercised or cancelled during the current and previous years.The line “Exercisable at the end of the period” refers to the total amount of options matured at the end of the period and not yet subscribed.


Stock option plans The stock option plans provide beneficiaries with the opportunity to exercise an option to subscribe to newly-issued Sogefi shares at a set price and within a specific period of time. According to the regulation, a pre-condition for exercising the option is a continued employer-employee relationship with or the continued appointment as a director/executive of the Company or one of its subsidiaries throughout the vesting period.

The main characteristics of the stock option plans approved during previous years and still under way are outlined below: • 2006 stock option plan restricted to employees of the Company and its subsidiaries for a maximum of 1,770,000 shares (1.49% of the share capital as of December 31, 2015) with a subscription price of Euro 5.87, to be exercised between September 30, 2006 and September 30, 2016;• 2007 stock option plan restricted to employees of the foreign subsidiaries for a maximum of 715,000 shares (0.6% of the share capital as of December 31, 2015) with an initial subscription price of Euro 6.96, to be exercised between September 30, 2007 and September 30, 2017. On April 22, 2008, the Board of Directors, under the authority vested in it by the Shareholders’ Meeting, adjusted the exercise price from Euro 6.96 to Euro 5.78 to take into account the extraordinary portion of the dividend distributed by the Shareholders’ Meeting on the same date;• 2008 stock option plan restricted to employees of the foreign subsidiaries for a maximum of 875,000 shares (0.74% of the share capital as of December 31, 2015) with a subscription price of Euro 2.1045, to be exercised between September 30, 2008 and September 30, 2018;• 2009 stock option plan restricted to employees of the Company and its subsidiaries for a maximum of 2,335,000 shares (1.97% of the share capital as of December 31, 2015) with a subscription price of Euro 1.0371, to be exercised between September 30, 2009 and September 30, 2019;• 2009 extraordinary stock option plan restricted to beneficiaries of 2007 and 2008 phantom stock option plans, still employed by the Company or by its subsidiaries, after having waived their rights under the above-mentioned phantom stock option plans, for a maximum of 1,015,000 shares (0.86% of share capital as of December 31, 2015) of which 475,000 (first Tranche options) with a subscription price of Euro 5.9054, to be exercised between June 30, 2009 and September 30, 2017 and 540,000 (second Tranche options) with a subscription price of Euro 2.1045, to be exercised between June 30, 2009 and September 30, 2018;• 2010 stock option plan restricted to the Director who filled the post of Managing Director of the Holding Company at the date of issue of the relevant plan and to employees of the Company and its subsidiaries for a maximum of 2,440,000 shares (2.06% of the share capital as of December 31, 2015) with a subscription price of Euro 2.3012, to be exercised between September 30, 2010 and September 30, 2020.

Please note that the 2005 stock option plan restricted to employees of the Company and its subsidiaries expired on September 30, 2015 as per relevant regulation.

The following table shows the total number of existing options with reference to the 2005-2010 plans and their average exercise price:


Number Average price of the year

Number Average price of the year

Not exercised/not exercisable at the start of the year 4,863,937 3.26 6,534,500 3.06Granted during the year - - - - Cancelled during the year (230,600) 5.00 (367,000) 4.30Exercised during the year (97,000) 1.49 (1,298,763) 1.94Expired during the year (345,600) 3.87 (4,800) 2.64Not exercised/not exercisable at the end of the year 4,190,737 3.16 4,863,937 3.26Exercisable at the end of the year 4,190,737 3.16 4,863,937 3.26

12.31.2015 12.31.2014

The line “Not exercised/not exercisable at the end of the period” refers to the total number of options, net of those exercised or cancelled during the current and previous years.The line “Exercisable at the end of the period” refers to the total amount of options matured at the end of the period and not yet subscribed.With reference to the options exercised during 2015, the average weighted price of the Sogefi share at the exercise dates is Euro 2.59.

Details of the number of options exercisable at December 31, 2015 are given below:

TotalNumber of exercisable options remaining at December 31, 2014 4,863,937Options matured during the year - Options cancelled during the year (230,600)Options exercised during the year (97,000)Options expired during the year (345,600)Number of exercisable options remaining at December 31, 2015 4,190,737

Phantom stock option plans

Unlike traditional stock option plans, phantom stock option plans do not envisage the granting of a right to subscribe or to purchase a share, but entail paying the beneficiaries an extraordinary variable cash amount corresponding to the difference between the Sogefi share price in the option exercise period and the Sogefi share price at the time the option was awarded.

In 2009, as shown in the paragraph entitled “Stock option plans”, the Holding Company gave the beneficiaries of the 2007 and 2008 phantom stock option plans the opportunity to waive the options of the above-mentioned plans and to join the 2009 extraordinary stock option plan.

The main characteristics of existing plan under way in 2015 are as follows:


• 2007 phantom stock option plan restricted to the Director who filled the post of Managing Director of the Holding Company at the date of issue of the relevant plan, managers and project workers of the Holding Company and to managers of Italian subsidiaries, for a maximum of 1,760,000 options at the initial grant price of Euro 7.0854, adjusted to Euro 5.9054 in 2008, to be exercised between September 30, 2007 and September 30, 2017. Following subscription to the 2009 extraordinary stock option plan, 475,000 options were waived.

Details of the number of phantom stock options as of December 31, 2015 are given below:

12.31.2015Not exercised/not exercisable at the start of the year 840,000Granted during the year - Cancelled during the year - Exercised during the year - Not exercised/not exercisable at the end of the year 840,000Exercisable at the end of the year 840,000

The fair value as of December 31, 2015 of the rights awarded was calculated using the Black-Scholes method and amounts to Euro 8 thousand (it equalled zero at the end of 2014).

30. RESTRUCTURING COSTS

Restructuring costs amount to Euro 6,915 thousand (compared with Euro 16,195 thousand the previous year) and mainly relate to the Holding Company Sogefi S.p.A., to subsidiary Sogefi Filtration do Brasil Ltda for the relocation of the São Paulo production site to Atibaia, and to subsidiaries Filtrauto S.A. and Systèmes Moteurs S.A.S. for reorganising clerical employees.

“Restructuring costs” relate for the most part to personnel costs and are made up of the accruals to the “Provision for restructuring” (Euro 1,095 thousand, net of provisions made during the previous years and not utilised) and for the remaining part (Euro 5,820 thousand) of costs incurred and paid during the year.

31. LOSSES (GAINS) ON DISPOSAL

Net gains amount to Euro 1,597 thousand (net gains for Euro 66 thousand as at December 31, 2014), Euro 1,541 thousand of which relate to the sale by subsidiary Sogefi Rejna S.p.A of the suspension business unit for the aftermarket.


32. EXCHANGE (GAINS) LOSSES

Net exchange losses as of December 31, 2015 amounted to Euro 3,590 thousand (Euro 618 thousand as of December 31, 2014). Such differences are mainly attributable to the depreciation of the Argentine Peso and Brazilian real against the Euro.The item includes approximately Euro 1.6 million relating to intercompany financial positions designated in Brazilian Real held by European companies and approximately Euro 1.4 million reflecting the debt exposure for the intercompany trade payables in Euro of Argentinian subsidiaries and for trade payables in USD towards third parties. Please note that the main outstanding intercompany trade and financial positions were closed in December 2015.

33. OTHER NON-OPERATING EXPENSES (INCOME)

These amount to Euro 32,373 thousand compared with Euro 24,769 thousand the previous year. The following table shows the main elements:

(in thousands of Euro) 2015 2014Indirect taxes 8,435 7,672Other fiscal charges 3,423 3,828Cost of stock option and stock grant plans 642 852Other non-operating expenses (income) 19,873 12,417TOTAL 32,373 24,769


� Euro 5,400 thousand were reclassified from “Variable sales and distribution costs” to “Other non-operating expenses (income)” reflecting an allocation made to Provision for product warranties;

“Indirect taxes” include tax charges such as property tax, taxes on sales revenues (taxe organic of the French companies), non-deductible VAT and taxes on professional training.“Other fiscal charges” consist of the cotisation économique territoriale (previously called taxe professionnelle) relating to the French companies, which is calculated on the value of fixed assets and on added value.

The main components of “Other non-operating expenses (income)” are as follows:

of which non-recurring- costs relating to the shutdown of the Lieusaint plant of subsidiary Allevard Rejna

Autosuspensions S.A., which took place in 2014, for the amount of Euro 417 thousand;

- product quality and warranty costs for the amount of Euro 15,725 thousand, Euro 11,800 thousand of which reflect pending “Claims” relating to subsidiary Systèmes Moteurs S.A.S. as outlined at paragraph 19.

of which recurring


- writedowns of tangible and intangible fixed assets for the amount of Euro 357 thousand;

- penalty for the early termination of certain lease and logistical service agreements by subsidiaries Sogefi Rejna S.p.A. and Sogefi Filtration Ltd totalling Euro 592 thousand;

- provisions for environmental activities and material scrapped after a fire in subsidiary United Springs S.a.S. for the amount of Euro 193 thousand;

- provisions for a dispute under way in subsidiary Sogefi Filtration Ltd for the amountof Euro 690 thousand;

- actuarial losses in the amount of Euro 164 thousand relating to “Other long-term benefits – Jubilee benefit” in the French subsidiaries;

- allocations to provisions for legal disputes with employees and third parties in several subsidiaries totalling Euro 979 thousand;

- pension costs for employees no longer on the books of Allevard Federn GmbH for the amount of Euro 90 thousand;

- penalty for tax disputes concerning indirect taxes for Euro 178 thousand mainly relating to subsidiaries Sogefi Engine Systems Canada Corp. and Sogefi Engine Systems Usa Inc.;

- other recurring costs for the amount of Euro 488 thousand.

34. FINANCIAL EXPENSES (INCOME), NET

Financial expenses are detailed as follows:

(in thousands of Euro) 2015 2014Interests on bonds 12,823 9,671Interest on amounts due to banks 9,080 10,791Financial charges under lease contracts 663 719Financial component of pension funds and termination indemnities 1,431 925Loss on interest-bearing hedging instruments 4,279 3,935Loss on anticipated closing of IRS contracts - 1,913Net loss on fair value derivatives not in cash flowhedge 400 3,944Other interest and commissions 7,359 9,907TOTAL FINANCIAL EXPENSES 36,035 41,805

Financial income is detailed as follows:

(in thousands of Euro) 2015 2014Gain on Cross currency swap in cash flow hedge 1,184 158Gain on interest-bearing hedging instruments - 31Interest on amounts given to banks 411 723Fair value of the embedded derivative (call option) 1,450 13,960Other interest and commissions 212 115TOTAL FINANCIAL INCOME 3,257 14,987

- - TOTAL FINANCIAL EXPENSES (INCOME), NET 32,778 26,818


“Financial expenses, net” show an increase of Euro 5,960 thousand, of which Euro 12,510 thousand reflect lower gains on the fair value of the conversion option associated with the convertible bond “€ 100.000.000 2 per cent. Equity Linked Bonds due 2021”

outlined in Note 19. This negative effect is partly offset by non-recurring expenses incurred in the previous year as a result of financial debt restructuring transactions. More specifically, Euro 3,337 thousand reflect the difference between the amount paid and the net book value of the loans redeemed early, and Euro 1,913 thousand arise from the termination of IRS contracts in connection with redeemed loans. Net expense was also lower (Euro 3,544 thousand) thanks to a lower change in the fair value of derivatives no longer accounted for as cash flow hedges.

Please note that item “Change in fair value measurement of derivative not in cash flow hedge” is comprised of:- a financial charge of Euro 2,930 thousand reflecting the portion of the reserve

previously booked to Other Comprehensive Income that will be reclassified to Income Statement over the same period of time expected for the differentials relating to the former underlying hedged item;

- a financial income of Euro 2,530 thousand reflecting the change in fair value compared with December 31, 2014.

35. LOSSES (GAINS) FROM EQUITY INVESTMENTS

As at December 31, 2015, there are no losses from equity investments.

36. INCOME TAXES

(in thousands of Euro) 2015 2014Current taxes 11,366 19,115Deferred tax liabilities (assets) 305 (6,057)Gain (loss) from partecipation to fiscal consolidation 1,242 - TOTAL 12,913 13,058

The year 2015 recorded a tax rate of 71.9% compared to 60.9% in the previous year.

A reconciliation between the standard tax rate (that of the Holding Company Sogefi S.p.A.) and the effective tax rate for 2015 and 2014 is shown in the table below. Taxes have been calculated at the domestic rates applicable in the various countries. The differences between the rates applied in the various countries and the standard Italian tax rate are included in the line “Other permanent differences and tax rate differentials”.



Result before taxes 17,964 27.5% 21,453 27.5%Theoretical income taxes 4,940 5,900Effect of increases (decreases) with respect to the standard rate:Statutory amortisation of goodwillNon-deductible costs, net 2,583 14.4% (878) -4.1%Use of deferred tax assets not recognised in previous years (6,421) -35.7% (2,430) -11.3%Deferred tax assets on losses for the year not recognised in the financial statements 5,943 33.0% 7,068 33.0%Taxed portion of dividends 200 1.1% 2,615 12.2%Other permanent differences and tax rate differentials 5,668 31.6% 783 3.6%

Income taxes in the consolidated income statement 12,913 71.9% 13,058 60.9%

Tax rate % Tax rate %

2015 2014

Item “Non-deductible costs, net” includes approximately Euro 2.7 million reflecting non-deductible costs incurred when the French subsidiaries and the Holding Company Sogefi S.p.A. waived receivables owed by the indirectly controlled Argentinian subsidiaries.The item “Use of deferred tax assets not recognised in previous years” mainly relates to subsidiaries Allevard Sogefi USA Inc., Sogefi Filtration Ltd and Sogefi M.N.R. Engine Systems India Pvt Ltd.; use of past losses for which no deferred tax assets had been recognised in previous years resulted in no taxes being posted on the positive results of these companies.“Deferred tax assets on losses for the year not recognised in the financial statements” are mainly attributable to subsidiaries Sogefi Filtration do Brasil Ltda, S.ARA Composite S.A.S., Allevard Rejna Autosuspensions S.A. and Sogefi (Suzhou) Auto Parts Co., Ltd, for which there was no probability at the end of the year that such losses would be recovered. The “Taxed portion of dividends” refers to the portion of dividends received from Group companies that is not tax-exempt and to the taxes on dividends paid by the French subsidiaries. Item “Other permanent differences and tax rate differentials” includes a liability of Euro 1,242 thousand for the Holding Company Sogefi S.p.A. arisen when the CIR Group transferred its tax surplus, Euro 571 thousand reflecting the different tax rate applied to subsidiary Sogefi Filtration Ltd, and approximately Euro 2,900 thousand relating to the writedown of deferred tax assets booked by subsidiaries Sogefi Filtration do Brasil Ltda and Allevard Rejna Argentina S.A.in previous years deemed to be no longer recoverable.

37. DIVIDENDS PAID

No dividends were paid to the Holding Company shareholders during the year 2015. Dividends paid to non-controlling interests amounted to Euro 4,341 thousand.The Holding Company Sogefi S.p.A. did not issue any shares other than ordinary shares; treasury shares are always excluded from the dividend.


38. EARNINGS PER SHARE (EPS)

Basic EPS 2015 2014

Net result attributable to the ordinary shareholders(in thousands of Euro) 1,120 3,639Weighted average number of shares outstandingduring the year (thousands) 115,264 114,713Basic EPS (Euro) 0.010 0.032

Diluted EPS The Company only has one category of potential ordinary shares, namely those deriving from the potential conversion of the stock options granted to Group employees.

2015 2014Net result attributable to the ordinary shareholders (in thousands of Euro) 1,120 3,639Average number of shares outstanding during the year (thousands) 115,264 114,713Weighted average number of shares potentially under option during the year (thousands) 2,868 3,146Number of shares that could have been issued at fair value (thousands) (2,136) (1,654)Shares arising from the potential conversion of the convertible loan 18,572 18,572Adjusted weighted average number of shares outstanding during the year (thousands) 134,568 134,777Diluted EPS (Euro) 0.008 0.027

The “Weighted average number of shares potentially under option during the year”

represents the average number of shares that are potentially outstanding under stock option plans (only for potentially dilutive options, i.e. with an exercise price lower than the average annual fair value of the ordinary shares of Sogefi S.p.A.), for which the subscription right has vested but has not yet been exercised at the end of reporting period. These shares have a potentially dilutive effect on basic EPS and are therefore taken into consideration in the calculation of diluted EPS.

The “Number of shares that could have been issued at fair value” represents the normalisation factor, being the number of shares that would have been issued dividing the proceeds that would have been received from subscription of the stock options by the average annual fair value of the Sogefi S.p.A. ordinary shares, which amounted to Euro 2.5133 in 2015, compared to Euro 3.5350 in 2014.

Please note that 1,821,304 shares that could dilute basic EPS in the future were not included in the calculation of diluted EPS for 2015 because their exercise price is higher than the average annual fair value of the ordinary shares of Sogefi S.p.A. in 2015.


E) 39. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Financial instruments

The following table shows a comparison between the book value of the Group's financial instruments and their fair value.

An analysis of the table shows that the fair value is different from the book value only in the case of short-term and long-term fixed-rate financial debts. This difference, corresponding to Euro 20,827 thousand, is generated by a recalculation of these loans at year-end date at current market rates.The spreads of floating-rate loans are in line with standard market conditions.The fair value of fixed-rate financial debts is classified as Level 2 in the fair value hierarchy (see paragraph “Categories of financial assets and liabilities stated in the financial statements and fair value hierarchy”) and was measured using generally accepted discounted cash flow models and a free-risk discount rate.The fair value of the convertible bond (including the embedded derivative connected with the conversion option) amounts to Euro 91,397 thousand (Euro 86,971 thousand as at December 31, 2014) and is classified as Level 1 in the fair value hierarchy, because the financial instrument is quoted on an active market.


(in thousands of Euro)12.31.2015 12.31.2014 12.31.2015 12.31.2014

Financial assetsCash and cash equivalents 121,892 124,033 121,892 124,033Securities held for trading 17 18 17 18Held-to-maturity investments 3,949 6,953 3,949 6,953

Assets for derivative financial instruments 931 519 931 519Current financial receivables 1,438 2,000 1,438 2,000Trade receivables 143,489 148,083 143,489 148,083Other receivables 7,915 6,884 7,915 6,884Other assets 3,974 3,599 3,974 3,599Other financial assets available for sale 439 439 439 439Non-current trade receivables 4 4 4 4Non-current financial receivables 13,156 157 13,156 157Other non-current receivables 34,666 34,626 34,666 34,626Financial liabilitiesShort-term fixed rate financial debts 15,323 11,268 15,164 11,731Other floating rate short-term financial debts 76,965 66,666 76,965 66,666Other short-term liabilities for derivative financial instruments 325 350 325 350Trade and other payables 325,421 309,808 325,421 309,808Other current liabilities 9,686 8,096 9,686 8,096Other non- current liabilities 9,195 6,988 9,195 6,988Other fixed rate medium/long-term financial debts 151,210 146,121 159,426 165,109Equity linked bond included embedded derivative (call option) 78,627 86,067 91,397 86,971Other floating rate medium/long-term financial debts 129,660 113,617 129,660 113,617Other medium/long-term liabilities for derivative financial instruments 11,562 13,924 11,562 13,924

Book value Fair value

Financial risk management

Given that the Group operates on world markets, its activity is exposed to various kinds of financial risks, including fluctuations, up or down, of interest and exchange rates, and cash flow risks (for cash flows generated outside of the Eurozone). In order to minimise these risks, the Group uses derivatives as part of its risk management activities, whereas it does not use or hold derivatives or similar instruments purely for trading purposes.

The Group also has available a variety of financial instruments other than derivatives, such as bank loans, financial leases, rentals, sight deposits, payables and receivables deriving from normal operating activities.The Group handles its main hedging operations centrally. Precise instructions have also been issued, laying down guidelines on risk management, while procedures have been introduced to control all transactions in derivatives.


Interest risk

The interest risk to which the Group is exposed mainly arises from long-term debts.

These debts may be fixed or floating rate.

Floating rate debts, which represent 45% of the net book value of Group loans, expose the Group to a risk arising from interest rate volatility (cash flow risk).

With regard to this risk, for the purposes of the related hedging, the Group may use derivative contracts which limit the impacts on the Income Statement of changes in the interest rate. At present, hedging transactions cover around 99% of the net book value of the Group's floating-rate debts. After such transactions, floating-rate loans exposing the Group to a cash flow risk fall to 0.5% of the net book value of the Group's total loans (not all derivatives for hedging purposes are accounted for as hedges as at December 31, 2015).

The following table gives a breakdown, by maturity, of the book value of the Group's financial assets and liabilities instruments, which are exposed to interest rate risk as of December 31, 2015, split according to whether they are contractually at a fixed or floating rate (for further details see the table shown in the analysis of "Liquidity risk"):


TOTAL FIXED RATE (15,323) (27,975) (17,524) (16,634) (41,229) (126,475) (245,159)TOTAL FLOATING RATE - ASSET 128,227 - - - - - 128,227LIABILITIES (76,969) (86,099) (21,891) (23,383) (9,846) - (218,188)

within 12 months

between 1 and 2 years

between 2 and 3

years

between 3 and 4

years

between 4 and 5

years

beyond 5 years Total

Financial instruments booked to “Total floating rate – Asset” refer to “Cash and cash equivalents” and “Other financial assets” (Securities held for trading, Held-to-maturity investments, Assets for derivative financial instruments).Below there is a sensitivity analysis which shows the impact on the Income Statement, net of tax, and on Equity of a change in interest rates that is considered reasonably possible.

An increase or decrease in interest rates of 100 basis points, applied to floating-rate financial assets and liabilities in existence as of December 31, 2015, including interest-rate hedges, would have the following effects:

(in thousands of Euro)Sensitivity Analysis Net profit Equity Net profit Equity+ 100 basis points 3,548 3,906 4,508 4,849- 100 basis points (3,650) (4,023) (4,685) (5,045)

12.31.2015 12.31.2014

The effect on Equity differs from the effect on the Income Statement by Euro 358 thousand (in the event of an increase in interest rates), and by Euro -373 thousand (in the event of a decrease in interest rates), which reflects the change in the fair value of the instruments hedging the interest rate risk.


Foreign currency risk

As it operates at an international level, the Group is exposed to the risk that changes in exchange rates could have an impact on the fair value of some of its assets or liabilities.Moreover, as can be seen from the segment information given in note 4, the Group produces and sells mainly in countries of the Eurozone, but it is potentially exposed to currency risk, above all in respect of the British Pound, Brazilian Real, US Dollar, Argentine Peso, Chinese Renminbi and Canadian Dollar.Generally speaking, the Group is not particularly exposed to exchange risk, which is mainly related to the translation of foreign subsidiaries' financial statements, as thecurrencies in which the foreign operating companies bill and those in which they are invoiced tend to be much the same.

As regards borrowings, there are also policies stating that any funds raised from third parties have to be in the same currency as the functional currency of the company obtaining the loan. If any exception is made to this principle, then the risk is hedged through forward currency purchases. More specifically, the Holding Company Sogefi S.p.A. made one private placement of bonds for the amount of USD 115 million in 2013. The exchange risk on this financing was hedged through cross currency swap contracts (please see paragraph “Hedging –

Exchange risk hedges” for more details).

A sensitivity analysis is provided below, which shows the impact on the Income Statement, especially on "Exchange (gains) losses", net of tax, and on Equity of a change that is considered reasonably possible in exchange rates of the main foreign currencies. Note that the exchange effect of translating the financial statements of foreign subsidiaries into Euro has not been taken into consideration here.What has been taken into consideration are the financial assets and liabilities outstanding as of December 31, 2015 denominated in a currency other than the functional currency of the individual subsidiaries. This analysis also takes into account any changes in the fair value of the financial instruments used to hedge exchange risk.

As of December 31, 2015, exchange risk was concentrated mainly in transactions with the Euro. A 5% appreciation or depreciation of the Euro against the other main currencies would have the following effects:

(in thousands of Euro)Sensitivity Analysis Net profit Equity Net profit Equity+ 5% (663) (663) (640) (640)- 5% 364 364 712 712

12.31.2015 12.31.2014

These effects are mainly due to the following exchange rates:-EUR/GBP due to the net debt exposure for the trade payables and financial debt of UK companies;-EUR/CNY due to the debt exposure for the trade payables and financial debt in Euro of Chinese subsidiaries;


-EUR/BRL arising from the exposure for trade payables in Euro of the Brazilian subsidiaries and for the financial debt in Brazilian Real of Sogefi Filtration S.A..

A sensitivity analysis of the CAD/USD exchange rate showed that a 5% appreciation/depreciation of the Canadian Dollar would cause Group's net profit and equity to decrease/increase by Euro 233 thousand. This effect is due to the exposure for the trade payables and financial debt in USD of the Canadian subsidiary.

In addition, a sensitivity analysis of the MEX/CAD exchange rate showed that a 5% appreciation/depreciation of the Peso would cause Group's net profit and equity to decrease/increase by Euro 222 thousand. This effect is due to the exposure for the trade payables and financial debt in CAD of the Mexican subsidiary.

Price risk

The Group is partially exposed to price risk as it makes purchases of various raw materials such as steel, plastics, aluminium, cellulose products.The risk is handled in the best way possible thanks to centralised purchasing and a policy of having various suppliers for each kind of raw material, operating in different parts of the world.We would also point out that price risk is generally mitigated by the Group's ability to pass on part of the variation in raw material costs to selling prices.The price risk on Group investments classified as “Securities held for trading” and “Other financial assets available for sale” is not significant.

Credit risk

This is the risk that one of the parties signing a contract of a financial nature defaults on an obligation, thereby provoking a financial loss. This risk can derive from strictly commercial aspects (granting and concentration of credits), as well as from purely financial aspects (choice of counterparties used in financial transactions).

From a commercial point of view, the Group does not have excessive concentrations of credit risk as it operates on distribution channels, both Original Equipment and the Aftermarket, that make it possible not to depend too much on individual customers. For example, Original Equipment sales are largely to car and industrial vehicle manufacturers. As regards the Aftermarket, on the other hand, the Group’s main customers are important international purchasing groups.In order to minimise credit risk, however, procedures have in any case been implemented to limit the impact of any customer insolvencies.As regards counterparties for the management of financial resources, the Group only has recourse to partners that have a safe profile and a high international standing.The Group's maximum exposure to credit risk as of December 31, 2015 is represented by the book value of the financial assets shown in the financial statements (Euro 331,870 thousand), as well as by the nominal value of the guarantees given in favour of third parties, as mentioned in note 43 (Euro 7,447 thousand).


The exposure to credit risk is essentially linked to trade receivables which amounted to Euro 142,266 thousand as of December 31, 2015 (Euro 150,976 thousand as of December 31, 2014), written down by Euro 5,367 thousand (Euro 5,170 thousand as of December 31, 2014). Receivables are backed by mainly insurance guarantees for Euro 5,327 thousand (Euro 6,633 thousand as of December 31, 2014). The Group does not have any other guarantees covering trade receivables.

The following table shows the changes in the allowance for doubtful accounts:

(in thousands of Euro) 12.31.2015 12.31.2014Opening balance 5,170 4,703Change to the scope of consolidation - - Accruals for the period 1,554 631Utilisations (56) (11)Provisions not used during the period (1,124) (202)Other changes - - Exchange differences (177) 49TOTAL 5,367 5,170

The following is an ageing analysis of gross receivables and the related allowance for doubtful accounts to help evaluate credit risk:

(in thousands of Euro)Gross value Allowance for

doubtful accountsNet value

Receivables past due:0-30 days 10,829 (19) 10,81030-60 days 2,793 (384) 2,40960-90 days 1,247 (88) 1,159over 90 days 8,276 (4,679) 3,597Total receivables past due 23,145 (5,170) 17,975Total receivables still to fall due 127,831 - 127,831TOTAL 150,976 (5,170) 145,806

12.31.2014

(in thousands of Euro)Gross value Allowance for

doubtful accountsNet value

Receivables past due:0-30 days 7,505 (403) 7,10230-60 days 2,764 (82) 2,68260-90 days 404 (140) 264over 90 days 6,854 (4,592) 2,262Total receivables past due 17,527 (5,217) 12,310Total receivables still to fall due 124,739 (150) 124,589TOTAL 142,266 (5,367) 136,899

12.31.2015


As of December 31, 2015, gross receivables past due had decreased by Euro 5,618 thousand compared to the previous year. A decrease is observed in all brackets and mainly affects the French and American subsidiaries.

The impact of gross receivables past due on total receivables stands at 12.3% compared to 15.3% in the previous year.Past due receivables have been written down by 29.8% of the total (22.3% as of December 31, 2014) and 67% (56.5% as of December 31, 2014) considering only the “over 90 days” bracket. Writedowns refer mainly to disputed amounts or receivables that have been due for a significant period of time and can no longer be collected. Net receivables past due account for 8.9% of total net receivables, compared to 12.3% inthe previous year.The item “Total receivables still to fall due” does not contain significant positions that have been renegotiated.

Considering the nature of the Sogefi Group's customers (cars and industrial vehicles manufacturers and important international purchasing groups), a Credit risk analysis by type of customer is not considered meaningful.

Liquidity risk

The Group is subject to a minimum amount of liquidity risk, namely having to handle a situation where it is not able to raise sufficient funds to meet its liabilities.The Group has always taken an extremely prudent approach to its financial structure, using mainly medium/long-term funding, whereas forms of short-term financing are generally used only to cope with moments of peak requirement. Its solid capital structure makes it relatively easy for the Group to find additional sources of financing.It should also be mentioned that the Group has implemented a cash pooling system for all of the main European subsidiaries, which makes it possible to optimise liquidity and cash flow management at a supranational level.

The following table shows an analysis of the Group's financial assets and liabilities instruments by maturity, including the amount of future interests to be paid and trade receivables and payables:



Fixed rateFinance lease Sogefi Filtration Ltd (230) (259) (292) (323) (362) (850) (2,316)Finance lease Allevard Sogefi U.S.A. Inc. (1,021) (1,150) (1,188) (987) (747) (1,977) (7,071)Private Placement USD 115 million Sogefi S.p.A. - (15,095) (15,095) (15,095) (15,095) (44,922) (105,302)Private Placement EUR 25 million Sogefi S.p.A. - - - - (24,940) - (24,940)

Equity linked bond Sogefi S.p.A. included embedded derivative (call option) - - - - - (78,627) (78,627)Sogefi (Suzhou) Auto Parts Co., Ltd loan (6,928) (9,721) - - - - (16,649)Sogefi Filtration do Brasil Ltda loan (5,489) (978) (720) - - - (7,186)Government financing (630) (527) (229) (229) (85) (98) (1,799)Other fixed rate loans (1,025) (245) - - - - (1,269)Future interest (10,472) (16,340) (8,052) (7,113) (6,275) (3,651) (51,903)instruments - interest risk hedging * 1,302 1,193 1,007 821 835 933 6,091TOTAL FIXED RATE (24,493) (43,121) (24,569) (22,926) (46,670) (129,193) (290,971)

Floating rateCash and cash equivalents 121,892 - - - - - 121,892Financial assets 3,966 - - - - - 3,966Assets for derivative financial instruments 931 - - - - - 931Current financial receivables 1,438 - - - - - 1,438Non-current financial receivables - - - - - - -

Bank overdrafts and other short-term loans (17,843) - - - - - (17,843)Sogefi S.p.A. loans (23,460) (82,938) (20,409) (11,187) (9,846) - (147,840)Shanghai Sogefi Auto Parts Co., Ltd loans (1,120) - - - - - (1,120)S.C. Systemes Moteurs SRL loan (1,638) (817) (459) - - - (2,914)Sogefi (Shouzu) Auto Parts Co., Ltd loan (26,364) - - - - - (26,364)Sogefi Filtration S.A. loan (700) - - - - - (700)Sogefi Engine Systems Canada Corp. loans (941) (981) (1,023) (796) - - (3,740)Other floating rate loans (4,900) (1,205) - - - - (6,105)Future interest (4,805) (1,975) (868) (406) (90) - (8,143)Liabilities for derivative financial instruments - exchange risk hedging (325) - - - - - (325)Future financial expenses on derivative instruments - interest risk hedging * (4,705) (4,735) (1,973) - - - (11,413)TOTAL FLOATING RATE 41,427 (92,651) (24,732) (12,389) (9,936) - (98,281)Trade receivables 143,489 - - - - - 143,489

Trade and other payables (325,421) (9,195) - - - - (334,616)

TOTAL FINANCIAL INSTRUMENT - ASSET 271,716 - - - - - 271,716TOTAL FINANCIAL INSTRUMENT - LIABILITIES (436,714) (144,967) (49,301) (35,314) (56,606) (129,193) (852,095)

* The amount is different from “Net financial assets for derivatives – hedging of interest rate” (equal to a total of Euro 1,594 thousand) because itrepresents the non-discounted cash flows

within 12 months

beyond 5 years Totalbetween 4 and 5

years

between 1 and 2 years

between 2 and 3

years

between 3 and 4

years


Hedging

a) Exchange risk hedges – not designated in hedge accounting

The Sogefi Group has the following contracts to hedge the exchange risk on financialand commercial balances. Note that even though the Group considers these instruments as exchange risk hedges from a risk management point of view, it has chosen not to adopt hedge accounting, as this treatment is not considered suitable for the Group's operating requirements. It therefore measures such contracts at fair value, posting the differences to “Exchange (gains) losses” in the Income Statement (this difference is offset within Income Statement by the fair value change of the asset/liability denominated in a certain currency). The fair value of these instruments was calculated using the forward curve of exchange rates as of December 31, 2015.

As of December 31, 2015, the Holding Company Sogefi S.p.A. held the following forward sale contracts to hedge exchange risk on intercompany financial positions:

Forward sale Date openedSpot price €/currency Date closed

Forward price €/currency

GBP 2,000,000 12/21/2015 0.72666 02/22/2016 0.72800USD 3,500,000 11/23/2015 1.06870 02/23/2016 1.07140

As of December 31, 2015, the fair value of these contracts was positive for Euro 83 thousand and was booked to “Other financial assets – Assets for derivative financial instruments”.

The subsidiary Filtrauto S.A. held the following forward purchase contract to hedge the exchange risk on trade positions:

Forward purchase Date openedSpot price €/currency Date closed


USD 200,000 11/16/2015 1.07170 01/12/2016 1.07290

and the following forward sale contracts to hedge the exchange risk on trade positions

Forward sale Date openedSpot price €/currency Date closed


USD 500,000 12/14/2015 1.09700 02/05/2016 1.09870USD 500,000 12/14/2015 1.09700 01/20/2016 1.09820

As of December 31, 2015, the fair value of the contracts was negative for Euro 10 thousand and was booked to “Other short-term liabilities for derivative financial instruments”.

The subsidiary Sogefi Filtration Ltd held the following forward sale contract to hedge the exchange risk on trade positions:


Forward sale Date openedSpot price

GBP/currency Date closedForward price GBP/currency

EUR 3,000,000 11/30/2015 0.70280 01/29/2016 0.70373

As of December 31, 2015, the fair value of this contract was negative for Euro 125 thousand and was booked to “Other short-term liabilities for derivative financial instruments”.

The subsidiary S.C. Systèmes Moteurs S.r.l. held the following forward purchase contracts to hedge the exchange risk on trade positions:

Forward purchase Date openedSpot price

RON/currency Date closedForward price

RON/currency EUR 400,000 11/19/2015 4.44600 01/15/2016 4.45300EUR 600,000 11/26/2015 4.44240 01/29/2016 4.44420

EUR 200,000 12/14/2015 4.51000 02/12/2016 4.51780


The subsidiary Sogefi Engine Systems Canada held the following forward purchase contracts to hedge the exchange risk on trade positions:


CAD/currency Date closedForward price

CAD/currency USD 5,000,000 11/19/2015 1.32910 02/05/2016 1.32970USD 5,000,000 11/04/2015 1.30800 01/05/2016 1.30880

and the following forward sale contract to hedge the exchange risk on intercompany financial positions:

Forward sale Date openedSpot price

CAD/currency Date closedForward price

CAD/currency MXN 54,000,000 12/18/2015 12.19530 03/22/2016 12.27130


The subsidiary Sogefi Engine Systems Mexico S. de R.L. de C.V. held the following forward purchase contract to hedge the exchange risk on trade positions:


MXN/USD Date closedForward price

MXN/USDMXN 9,000,000 11/16/2015 16.70000 01/05/2016 16.75200


and the following forward purchase contract to hedge the exchange risk on trade positions and intercompany financial positions:


MXN/currency Date closedForward price

MXN/currency

CAD 5,500,000 10/30/2015 12.50140 01/29/2016 12.58290

As of December 31, 2015, the fair value of these contracts was negative for Euro 31 thousand and was booked to “Other short-term liabilities for derivative financial instruments”.

Subsidiary Sogefi MNR Engine Systems India Pvt. Ltd held the following forward purchase contracts to hedge the exchange risk on intercompany financial positions:


INR/currency Date closedForward price INR/currency

EUR 2,000,000 10/30/2015 71.42000 01/29/2016 73.44500

As of December 22, 2015, the fair value of these contracts was negative for Euro 31 thousand and was booked to “Other short-term liabilities for derivative financial instruments”.

The subsidiary Allevard Molas do Brasil Ltda held the following forward purchase contract to hedge the exchange risk on trade positions:


BRL/currency Date closedForward price BRL/currency

USD 1,475,000 16/12/2015 3.90480 05/01/2016 3.93980

and the following forward sale contracts to hedge the exchange risk on trade positions:

Forward sale Date opened BRL/currency Date closed BRL/currency EUR 269,000 16/12/2015 4.29720 26/01/2016 4.37400EUR 239,000 16/12/2015 4.28694 25/02/2016 4.41410

As of December 31, 2015, the fair value of those contracts was positive for Euro 3 thousand. An amount of Euro 6 thousand was recognised in “Other financial assets –

Assets for derivative financial instruments” and an amount of Euro 3 thousand was recognised in “Other short-term liabilities for derivative financial instruments”.

The subsidiary Sogefi Rejna SpA held the following forward purchase contracts to hedge the exchange risk on trade positions:


Forward purchase Date openedSpot price €/currency Date closed


USD 100,000 11/06/2015 1.08700 01/08/2016 1.08805USD 200,000 12/15/2015 1.08770 01/29/2016 1.10100USD 200,000 12/15/2015 1.08770 01/12/2016 1.10100


The subsidiary Allevard Rejna Argentina S.A. held the following forward purchase contract to hedge the exchange risk on trade positions:


ARP/currency Date closedForward price ARP/currency

USD 900,000 06/10/2015 9.45000 01/29/2016 10.37000

As of December 31, 2015, the fair value of this contract was positive for Euro 179 thousand and was booked to “Other financial assets – Assets for derivative financial instruments”.

The subsidiary Sogefi Filtration do Brasil Ltda held the following forward purchase contracts to hedge the exchange risk on trade and intercompany financial positions:


BRL/currency Date closedForward price BRL/currency

USD 540,000 12/14/2015 3.89210 01/29/2016 3.96550USD 560,000 12/14/2015 3.89580 01/29/2016 4.00130EUR 430,000 12/14/2015 4.30490 02/29/2016 4.43090EUR 400,000 12/14/2015 4.30600 01/29/2016 4.39300

EUR 2,000,000 10/20/2015 4.40280 01/18/2016 4.56320EUR 2,000,000 11/04/2015 4.11240 02/02/2016 4.27000

As of December 31, 2015, the fair value of these contracts was negative for Euro 134thousand and was booked to “Other short-term liabilities for derivative financial instruments”.

The subsidiary Allevard IAI Suspension Pvt Ltd held the following forward purchase contracts to hedge the exchange risk on intercompany financial positions:


INR/currency Date closedForward price INR/currency

EUR 125,000 12/01/2015 70.32000 01/04/2016 72.23000EUR 750,000 12/01/2015 70.32000 01/04/2016 72.23000EUR 150,000 12/01/2015 70.32000 01/04/2016 72.23000



b) Interest risk hedges – in hedge accounting

In 2013, the Holding Company Sogefi S.p.A. entered into the following Interest Rate Swap contracts (to hedge interest rate risk on future Group indebtedness). As cash flows were to be exchanged from 2016 onwards, in 2015 they were associated to the new loan granted by ING Bank N.V. totalling Euro 30 million and passed the effectiveness test under IAS 39 as of December 31, 2015:

Description of IRS Date opened Contract maturity

Notional Fixed rate Fair value at 12.31.2015

Fair value at 12.31.2014

Hedging of Sogefi S.p.A. future financial indebtedness 02/21/2013 06/01/2018 10,000 1.660% (349) (281)Hedging of Sogefi S.p.A. future financial indebtedness 02/19/2013 06/01/2018 10,000 1.650% (347) (277)Hedging of Sogefi S.p.A. future financial indebtedness 02/21/2013 06/01/2018 5,000 1.660% (175) (139)TOTAL 25,000 (871) (697)

These financial instruments envisage payment by the Group of an agreed fixed rate and payment by the counterparty of the floating rate that is the basis of the underlying loan.

c) Exchange risk hedges – in hedge accounting

During 2013 the Holding Company Sogefi S.p.A. entered into three cross currency swap (Ccs) contracts maturing in June 2023, designated in hedge accounting, in order to hedge interest and exchange rate risk relating to the private placement of USD 115 million bonds. Under these contracts, a fixed interest receivable of 600 basis points on subscribed notional USD amount is collected by the Holding Company Sogefi S.p.A. on a quarterly basis against payment of a fixed interest payable on a notional amount in EUR corresponding to the USD notional amount converted at the fixed exchange rate of 1.3055 (totalling Euro 88,089 thousand).

Details of these contracts are as follows:


Description of CCSwap Date opened Contract maturity

Notional (in

thousands of Usd)

Fixed rate Fair value at 12.31.2015


Private placement USD 115 million (05/03/2013 maturity 06/01/2013), coupon 600 bps 04/30/2013 06/01/2023 55,000

6.0% USD receivable

5.6775% Euro payables 6,349 140


6.0% USD receivable 5.74%

Euro payables 4,529 17


6.0% USD receivable 5.78%

Euro payables 2,278 (7)TOTAL 115,000 13,156 150

d) derivatives no longer in hedge accounting

At December 31, 2015, the Group holds the following interest rate swap contracts that, based on the effectiveness tests carried out on December 31, 2013 (for the first two derivative instruments reported below), on June 30, 2014 and December 31, 2014 (for the other derivative instruments shown) have become ineffective. The purpose of most of these derivative instruments was to hedge the risk of fluctuations in the cash flows arising from expected future indebtedness of the Group, so that the hedging relationship was discontinued and the derivative contracts were reclassified as fair value through profit or loss instruments. The change in fair value compared to the last effectiveness test is recognised immediately in the Income Statement, whereas the reserve booked to Other Comprehensive Income (if any) is reclassified in the Income Statement over the same period of time as the differentials relating to the former underlying hedged item. Details are as follows:

Derivative held by the subsidiary Sogefi Filtration S.A.:




Hedging of Sogefi Filtration S.A. loan for Euro 7 million (05/30/2011 maturity 05/30/2016), rate Euribor 3 months + 225 bps 08/30/2011 05/30/2016 350 2.651% (3) (24)TOTAL 350 (3) (24)

Derivatives held by the Holding Company Sogefi S.p.A.:





Hedging of Sogefi S.p.A. loan for Euro 60 million (04/29/2011 maturity 12/31/2016), rate Euribor 3 months + 200 bps 05/11/2011 12/31/2016 8,000 2.99% (158) (518)TOTAL 8,000 (158) (518)




Hedging of Sogefi S.p.A. future financial indebtedness 02/10/2011 06/01/2018 10,000 3.679% (909) (1,153)Hedging of Sogefi S.p.A. future financial indebtedness 02/23/2011 06/01/2018 10,000 3.500% (897) (1,135)Hedging of Sogefi S.p.A. future financial indebtedness 03/11/2011 06/01/2018 10,000 3.545% (908) (1,148)Hedging of Sogefi S.p.A. future financial indebtedness 03/23/2011 06/01/2018 10,000 3.560% (910) (1,152)Hedging of Sogefi S.p.A. future financial indebtedness 03/28/2011 06/01/2018 10,000 3.670% (939) (1,195)Hedging of Sogefi S.p.A. future financial indebtedness 05/13/2011 06/01/2018 10,000 3.460% (887) (1,124)Hedging of Sogefi S.p.A. future financial indebtedness 06/24/2011 06/01/2018 10,000 3.250% (834) (1,051)Hedging of Sogefi S.p.A. future financial indebtedness 06/28/2011 06/01/2018 10,000 3.250% (834) (1,049)Hedging of Sogefi S.p.A. future financial indebtedness 11/28/2011 06/01/2018 10,000 2.578% (668) (824)TOTAL 90,000 (7,786) (9,831)




Hedging of Sogefi S.p.A. future financial indebtedness 02/11/2013 06/01/2018 5,000 1.225% (166) (186)Hedging of Sogefi S.p.A. future financial indebtedness 02/01/2013 06/01/2018 10,000 1.310% (353) (397)Hedging of Sogefi S.p.A. future financial indebtedness 02/06/2013 06/01/2018 10,000 1.281% (346) (388)Hedging of Sogefi S.p.A. future financial indebtedness 02/11/2013 06/01/2018 5,000 1.220% (190) (184)Hedging of Sogefi S.p.A. future financial indebtedness 02/12/2013 06/01/2018 5,000 1.240% (168) (185)TOTAL 35,000 (1,223) (1,340)




Hedging of Sogefi S.p.A. future financial indebtedness 02/07/2013 06/01/2018 15,000 1.445% (580) (566)Hedging of Sogefi S.p.A. future financial indebtedness 02/11/2013 06/01/2018 5,000 1.425% (191) (186)Hedging of Sogefi S.p.A. future financial indebtedness 02/19/2013 06/01/2018 10,000 1.440% (385) (376)Hedging of Sogefi S.p.A. future financial indebtedness 02/11/2013 06/01/2018 5,000 1.420% (165) (185)Hedging of Sogefi S.p.A. future financial indebtedness 02/13/2013 06/01/2018 5,000 1.500% (200) (195)TOTAL 40,000 (1,521) (1,508)

The discontinuation of hedge accounting had the following impact on the financial statements as of December 31, 2015:


- a financial expense of Euro 2,930 thousand was recognised in the Income Statement; this amount reflects the portion of the reserve previously booked to “Other Comprehensive Income” that will be recognised in the Income Statement over the same period of time as the differentials relating to the underlying hedged item (the effective financial indebtedness of the Group);

- a financial income of Euro 2,530 thousand reflecting the change in fair value compared to December 31, 2014 was recognised in the Income Statement;

e) fair value of derivatives in hedge accounting and no longer in hedge accountingThe fair value of all derivatives was calculated using the forward curves of exchange and interest rates as at December 31, 2015, also taking into account a credit valuation adjustment/debit valuation adjustment. The fair value amounts of derivatives are classified as Level 2 in fair value hierarchy, based on the significance of the inputs used in fair value measurements.

Embedded derivative contained in bond

As already explained, the Holding Company Sogefi S.p.A. approved the issue of convertible bond “€ 100,000,000 2 per cent. Equity Linked Bonds due 2021” whose regulations provide, following the Extraordinary Shareholders' Meeting of September 26, 2014 authorising a share capital increase with the exclusion of the shareholders' option right under article 2441, Paragraph 5, of the Italian Civil Code, to be exclusively used for the conversion of said bonds, for the Company to settle any conversion by cash or a combination of ordinary shares and cash.This option included an embedded derivative instrument presente in the relevant balance sheet item (financial liability). As prescribed in IAS 39, on May 14, 2014 the Holding Company Sogefi S.p.A. split the embedded derivative (call option involving Company shares) from the primary contract (bond) and determined its fair value (Euro 24,500 thousand). The fair value was level 2. On December 31, 2014 the fair value of the embedded derivative instrument was Euro 10,540 thousand and the relevant positive change of Euro 13960 thousand was booked in the income statement under "Other financial income". Upon the decision of the Board of Directors of January 19, 2015 and the execution of a formal waiver (Deed Poll), subject to the British law, on January 28, 2015 (notified to the agent on January 29. 2015), the Holding Company Sogefi S.p.A. has unilaterally waived its right to refund the convertible bonds in cash rather than ordinary shares in case of the conversion right being exercised under the bond issue regulations. This waiver is final, unconditional and irrevocable. The matter of the waiver to this right has a similar effect, under the British law, to an amendment to the bond issue regulations. As at January 28, 2015 the fair value of the option (calculated based on the same model applied on December 31, 2014) amounted to Euro 9,090 thousand. This produced a positive effect in the 2015 Income Statement for Euro 1,450 thousand. Moreover, since the execution of the deed poll has a similar effect to an amendment of the bond issue regulations, the Holding Company Sogefi S.p.A. reconsidered the liability-equity classification as recorded at the first posting of the option (upon the expiry of the call option in favour of the Holding Company Sogefi S.p.A. in an irrevocable, final and unconditional fashion). Therefore, on that date the Holding Company Sogefi S.p.A. re-


classified the amount of the above-mentioned option (Euro 9,090 thousand) from “Other medium/long-term financial liabilities for derivative financial instruments” to net equity.More specifically, the parameters used to calculate the fair value of the option at the deed poll date were the following:

- Quarterly average of the Sogefi stock as at January 28, 2015: Euro 2.17 (the quarterly average was used in the light of high volatility posted by the stock in the last months of 2014), Euro 2.26 at December 31, 2014.

- Exercise price: Euro 5.3844. - BTP yield at 7 years as at January 28, 2015: 1.24% (1.43% as at December 31,

2014).- Average annual volatility of the Sogefi stock as at January 28, 2015: 46.4%

(45.2% as at December 31, 2014).

Equity management

The main objectives pursued by the Group through its equity risk management are the creation of value for shareholders and the safeguarding of business continuity. The Group also sets itself the objective of maintaining an optimal equity structure so as to reduce the cost of indebtedness and meet the covenants established by the loan agreements.

The Group monitors equity on the basis of the net financial position/total equity ratio (gearing ratio). For the purposes of determination of the net financial position reference is made to note 22. Total equity is analysed in note 21.As of December 31, 2015, gearing stands at 1.69 (1.68 as of December 31, 2014).

Categories of financial assets and liabilities stated in the financial statements and fair value hierarchy

In compliance with the requirements of IFRS 7, the table below provides the information on the categories of financial assets and liabilities held by the Group as of December 31, 2015.For the financial instruments measured at fair value in the statement of financial position the IFRS 7 requires a classification by hierarchy determined by reference to the source of inputs used to derive the fair value. This classification uses the following three levels:- level 1: if the financial instrument is quoted in an active market;- level 2: if the fair value is determined using valuation techniques and the inputs used

for the valuation (other than quoted prices of financial instruments) are observable in the market. Specifically, fair value was calculated using the forward curves of exchange and interest rates;

- level 3: if the fair value is determined using valuation techniques and the inputs used for the valuation are non-observable in the market.

The following table therefore shows the fair value level of financial assets and liabilities measured at fair value, as of December 31, 2015:



Fair value hierarchy

Cash and cash equivalents 5 121,892 121,892 - - - - Securities held for trading 6 17 - - - - 17 1 Held-to-maturity investments 6 3,949 - - 3,949 - - Assets for derivative financial instruments 6 931 - - - - 931 2 Trade receivables 8 143,489 143,489 - - - - Other receivables 8 7,915 7,915 - - - - Other assets 8 3,974 3,974 - - - -

Other financial assets available for sale 12 439 - 439 * - - - Non-current trade receivables 13 4 4 - Other non-current receivables 13 34,666 34,666 - - - -

Short-term fixed rate financial debts 16 15,323 - - - 15,323 - Short-term variable rate financial debts 16 76,965 - - - 76,965 - Other short-term liabilities for derivative financial instruments 16 325 - - - - 325 2 Trade and other payable 17 325,421 - - - 325,421 - Other current liabilities 18 9,686 - - - 9,686 -

Medium/long-term fixed rate financial debts 16 151,210 - - - 151,210 -

Equity linked bond included embedded derivative (call option) 16 78,627 - - - 78,627 - 2 Medium/long-term variable rate financial debts 16 129,660 - - - 129,660 - Other medium/long-term liabilities for derivative financial instruments 16 11,562 - - - - 11,562 ** 2

* relating to financial assets valued at cost, as permitted by IAS 39, insofar as a reliable fair value is not avaible.** of which € 871 thousand relating to hedge instruments accounted according to the cash flow hedge method.

Held-to-maturity investments

Fair Value with changes booked in the Income Statement

Financial liabilities

Amount

Note Book value 2015

Receivables and financial

assets

Current assets

Current liabilities

Non-current assets

Financial assets

available for sale

Non-current liabilities

The following table shows the fair value level of financial assets and liabilities measured at fair value, as of December 31, 2014:



Fair value hierarchy

Current assetsCash and cash equivalents 5 124,033 124,033 - - - - -Securities held for trading 6 18 - - - - 18 1Held-to-maturity investments 6 6,953 - - 6,953 - - -Assets for derivative financial instruments

6519 - - - - 519 2

Trade receivables 8 148,083 148,083 - - - - -Other receivables 8 6,884 6,884 - - - - -Other assets 8 3,599 3,599 - - - - -Non-current assetsOther financial assets available for sale 12 439 - 439 * - - - -Other non-current receivables 13 4 4 - - - - -Other non-current receivables 13 34,626 34,626 - - - - -

Short-term fixed rate financial debts 16 11,268 - - - 11,268 - -Short-term variable rate financial debts 16 66,666 - - - 66,666 - -Other short-term liabilities for derivative financial instruments 16 350 - - - - 350 2Trade and other payables 17 309,808 - - - 309,808 - -Other current liabilities 18 8,096 - - - 8,096 - -

Medium/long-term fixed rate financial debts 16 146,121 - - - 146,121 - -Equity linked bond included embedded derivative (call option) 16 86,067 - - - 86,067 - 2Medium/long-term variable rate financial debts 16 113,617 - - - 113,617 - -

Other medium/long-term liabilities for derivative financial instruments 16 13,924 - - - - 13,924 ** 2

Fair Value with changes booked in the income statement

Amount

Held-to-maturity investments

Financial liabilities

Current liabilities

Non-current liabilities

Note Book value 2014

Receivables and financial

assets

Financial assets

available for sale


F) 40. RELATED PARTY TRANSACTIONS

See IAS 24 and the related communications from Consob for the definition of related party transactions.

The Group is controlled by the Parent Company CIR S.p.A. (which in turn is controlled by the ultimate Parent Company F.lli De Benedetti S.p.A.), which as of December 31, 2015 held 56.03% of the share capital (57.61% of outstanding shares, excluding treasury shares). Sogefi S.p.A.’s shares are listed on the STAR segment of Mercato Telematico Azionario managed by Borsa Italiana S.p.A..

The Group’s consolidated financial statements include the financial statements of the consolidated companies, listed in chapter H along with the stake held in the same by the Group.Dealings between Group companies are conducted at arm’s length, taking into account the quality and nature of services rendered; the Holding Company Sogefi S.p.A. charges Group companies fees for administrative, financial and management support services. The Holding Company also debits and credits interest at a market spread to those subsidiaries that have joined the Group's cash pooling system.The Holding Company is also charging royalty fees on the Group “SAP” information system to those subsidiaries at which implementation has been completed, as well as a consideration for the Group centralised data communication service through a single provider.The subsidiary Sogefi Purchasing S.a.S. charges Group companies for purchase management support services.

As part of its activity, Sogefi S.p.A. makes use of the services provided by CIR S.p.A., its Parent Company, in areas such as strategic development and of an administrative, financial, fiscal and corporate nature. This relationship is regulated by contracts at arm's-length conditions and the cost is commensurate to the effective value of such services to the Sogefi Group in terms of the resources devoted to them and the specific economic advantages obtained as a result.In 2015, the Holding Company Sogefi S.p.A. used the services of CIR S.p.A., paying Euro 850 thousand for them (Euro 1,350 thousand in the previous year).

As of December 31, 2015, the Italian companies of the Sogefi Group had receivables for the amount of Euro 6,378 thousand owed by CIR S.p.A. in connection with their participation in the group tax filing system, and payables for the amount of Euro 898 thousand. As of December 31, 2014, receivables amounted to Euro 2,149 thousand, and Euro 1,487 thousand were collected during the course of 2015. No payables connected with the participation in the group tax filing system existed at the end of the previous year.

At the end of 2015, the subsidiary Sogefi Rejna S.p.A. recorded an income of Euro 212 thousand (Euro 128 thousand in the previous year) following the transfer of fiscal surplus to companies that have joined the CIR Group tax filing system in order to have an interest deduction. The Holding Company Sogefi S.p.A. recorded an expense of Euro 1,454 thousand (Euro 128 thousand in the previous year) due to


the payment for the fiscal surplus received from the companies that have joined the CIR Group tax filing system.As regards economic transactions with the Board of Directors, Statutory Auditors, Chief Executive Officer and the Manager with strategic responsibility in 2015, please refer to the attached table.

Apart from those mentioned above and shown in the table below, at the date of these financial statements, we are not aware of any other related party transactions.

The following table summarises related party transactions:

(in thousands of Euro) 2015 2014Receivables - for the Group tax filing from CIR S.p.A. 6,378 2,149 - for income following the transfer of fiscal surplus to the CIR Group 212 128Payables - for purchases of energy/gas from Sorgenia S.p.A. 8 8 - for expense due to fiscal surplus received from the CIR Group 1,454 128 - for Director's remuneration 76 14 - for services from other related companies 31 20Costs - for services received from CIR S.p.A. 850 1,350 - for expense due to fiscal surplus received from the CIR Group 1,454 128 - for services from other related companies 123 122Revenues - for income following the transfer of fiscal surplus to the CIR Group 212 128Compensation of directors and statutory auditors - directors (*) 698 1,721 - statutory auditors 160 164

Compensation and related contributions to the ex General Manager of the Holding Company (**) 610 851Compensation and related contributions to Manager with strategic responsibilities ex Consob resolution no. 17221/2010 (***) 1,132 746

(***) including the indemnity for Euro 682 thousand related to the termination of employment in 2015. The voice includes also the imputed income of stock option and stock grant plans for Euro 102 thousand (imputed cost for Euro 181 thousand in 2014) booked under the item "Other non-operating expenses (income)"

(*) including the imputed cost of stock option and stock grant plans for Euro 84 thousand (Euro 273 thousand in 2014) booked under the item "Other non-operating expenses (income)"

(**) the cost of 2015 is related to the General Director in charge since June 8th 2015. The cost of 2014 is related to the termination of employment of the General Director and the indemnity correlated. The voice includes also the imputed cost of stock option and stock grant plans for Euro 13 thousand in 2015 (Euro 114 thousand as income in 2014) booked under the item "Other non-operating expenses (income)"


G) COMMITMENTS AND RISKS

41. OPERATING LEASES

For accounting purposes, leases and rental contracts are classified as operating when:- a significant part of the risks and benefits associated with ownership are retained by

the lessor;- there are no purchase options at prices that do not represent the presumable market

value of the asset being leased at the end of the period;- the lease term is not for the major part of the useful life of the asset leased or rented.

Operating lease instalment payments are booked to the Income Statement in line with the underlying contracts.

The main operating leases existing as of December 31, 2015 regard the following companies:

- Sogefi (Suzhou) Auto Parts Co., Ltd. for the rental of three production plants in Wujiang, under a contract that will expire in September 2033. As at December 31, 2015, total remaining payments amount to Euro 16,106 thousand, Euro 774 thousand of which due by the end of the year. The Group has notgiven any guarantees whatsoever for this contract;

- Filtrauto S.A. for the rental of the offices in Guyancourt. The two contracts will expire in March 2020 and May 2021, respectively. Remaining payments as of December 31, 2015 amount to Euro 4,070 thousand, Euro 778 thousand of which are due by the end of the year.The Group has not given any guarantees for this contract;

- Allevard Federn GmbH for the rental of the production plant in Völklingen. The contract expires in September 2020. As at December 31, 2015, the remaining payments amount to Euro 1,825 thousand, Euro 384 thousand of which due by the end of the year.The Group has not given any guarantees for this contract;

- Sogefi Engine Systems Canada Corp. for the rental of the production plant in Montreal. The contract expires in December 2021. As at December 31, 2015, the remaining payments amount to Euro 4,898 thousand, Euro 937 thousand of which due by the end of the year.For this contract Sogefi S.p.A. provided a guarantee equal to 100% of the residual instalments still to fall due;

- Sogefi Engine Systems Mexico S. de R.L. de C.V. for the rental of the production plant in Monterrey. The contract expires in June 2031. As at December 31, 2015, the remaining payments amount to Euro 13,384 thousand, Euro 479 thousand of which due by the end of the year.For this contract Sogefi S.p.A. provided a guarantee equal to 100% of the residual instalments still to fall due;


- Allevard Sogefi USA Inc. for the rental of the production plant in Prichard (West Virginia). The contract expires in October 2019. As at December 31, 2015, the remaining payments amount to Euro 793 thousand, Euro 199 thousand of which due by the end of the year.For this contract Sogefi S.p.A. provided a guarantee equal to 100% of the residual instalments still to fall due;

- Allevard Sogefi U.S.A. Inc. for the rental of the production plant in Prichard (West Virginia). The contract expires in May 2019, and the remaining payments as at December 31, 2015, amount to Euro 1,245 thousand, of which Euro 364 thousand due by the end of the year. For this contract Sogefi S.p.A. provided a guarantee equal to 63% of the residualinstalments still to fall due. The guarantee is renewed at the end of each year according to the residual amount.There are no restrictions of any kind on this type of lease and at the end of the contract the US company will be able to purchase the building at its market value.

Future lease payments under operating leases outstanding as of December 31, 2015 are as follows:

(in thousands of Euro) 2015 2014Within 12 months 8,316 7,555Between 1 and 5 years 25,910 18,814Beyond 5 years 11,385 12,646TOTAL 45,610 39,016

42. INVESTMENT COMMITMENTS

At December 31, 2015, Group companies have binding commitments for investments relating to the purchase of property, plant and equipment for Euro 1,709 thousand, Euro 323 thousand at the end of the previous year, as already disclosed in the explanatory notes regarding tangible fixed assets.

43. GUARANTEES GIVEN

Details of guarantees are as follows:


(in thousands of Euro) 12.31.2015 12.31.2014PERSONAL GUARANTEES GIVENa) Sureties to third parties 4,984 1,893b) Other personal guarantees in favour of third parties 2,463 9,714

TOTAL PERSONAL GUARANTEES GIVEN 7,447 11,607REAL GUARANTEES GIVENa) Against liabilities shown in the financialstatements 8,422 7,122

TOTAL REAL GUARANTEES GIVEN 8,422 7,122

The guarantees given in favour of third parties relate to guarantees given to certain customers, to Inland Revenue for Group VAT and to operating lease contracts; guarantees are shown at a value equal to the outstanding commitment at the reporting period. These accounts indicate risks, commitments and guarantees provided by Group companies to third parties.

The "Other personal guarantees in favour of third parties" relate to the commitment of the subsidiary LPDN GmbH to the employee pension fund for the two business lines at the time it was acquired in 1996; this commitment is covered by the contractual obligations of the seller, who is a leading German operator.

“Real guarantees given” refer to subsidiaries Sogefi Engine Systems Canada Corp., Allevard IAI Suspensions Pvt Ltd, United Springs B.V., Sogefi Filtration do Brasil Ltda and Sogefi M.N.R. Engine Systems India Pvt Ltd, which pledged tangible fixed assets and trade receivables as real guarantees to secure loans obtained from financial institutions.

44. OTHER RISKS

As of December 31, 2015, the Group had third-party goods and materials held at Group companies worth Euro 10,200 thousand (Euro 9,367 thousand as of December 31, 2014).

45. POTENTIAL LIABILITIES

Sogefi Group is managing environmental issues in some production plants. No relevant costs are expected.

In 2004, the subsidiary Sogefi Filtration Ltd purchased the assets and liabilities of Filtrauto UK Ltd, thus taking charge of employer as regards the pension funds Filtrauto UK Limited Staff Pension Scheme and Filtrauto UK Limited Works Pension Scheme. Said funds are defined-benefit plans.Between 1990 and 2006, the employer and the pension fund trustees received professional advices from leading consulting companies to equalise the conditions of the pension funds, as required by amended legislation.It shows that the above equalisation may not have been correctly applied.


Sogefi Filtration Ltd has therefore submitted a protective claim to the Birmingham High Court. The Court could conclude that the equalisation was correctly applied, or that an adjustment could be possible, or even that there is a potential liability. In the latter case, we are confident that almost the entire amount of any liability can be recovered from the consultants.An initial valuation of the maximum potential liability, before its likely recovery from the consultants amounts to around Euro 2 million.

In January 2014, the Holding Company Sogefi S.p.A. received two notices of assessment under which tax authorities disallowed deduction of the costs for services performed by the Parent Company CIR S.p.A. during the year 2009 for Euro 1.8 million from IRES tax base and consequently their eligibility for VAT tax deduction.Based on the tax advisor's opinion, Directors believe said arguments to be groundless and inconsistent with the applicable tax regulation in force and, for the moment, the risk of losing to be possible but not likely.This is why the Holding Company Sogefi S.p.A. did not set aside any amount for tax risks in financial statements as at December 31, 2015.This is to report that said assessments were already processed by the Provincial Tax Committee with a favourable outcome.The tax authorities appealed before the Regional Tax Committee against the outcome.

46. ATYPICAL OR UNUSUAL TRANSACTIONS

Pursuant to Consob Communication dated July 28, 2006, it is specified that the Group did not implement any atypical and/or unusual transactions during 2015.

47. SUBSEQUENT EVENTS

No significant events occurred after December 31, 2015.

336 Sogefi | 2015 Consolidated Financial Statements – Group Companies

H) GROUP COMPANIES

47. LIST OF GROUP COMPANIES AS OF DECEMBER 31, 2015

SUBSIDIARIES CONSOLIDATED ON A LINE-BY-LINE BASIS

Direct equity investment Currency Sharecapital

Number of shares

%held

Par valueper share

Par valueof the interest

heldSOGEFI REJNA S.p.A.Mantova (Italy)

Euro 21,978,316 21,950,990 99.88 1 21,950,990

SOGEFI FILTRATION LtdTredegar (Great Britain)

GBP 5,126,737 5,126,737 100.00 1 5,126,737

SOGEFI FILTRATION S.A.Cerdanyola (Spain)86.08% held by Sogefi S.p.A.13.92% held by Filtrauto S.A.

Euro 14,249,084.96

2,370,896 100.00 6.01 14,249,084.96

FILTRAUTO S.A.*Guyancourt (France)

Euro 5,750,000 287,500 100.00 20 5,750,000

ALLEVARD REJNA AUTOSUSPENSIONS S.A. **Guyancourt (France)

Euro 34,000,000 1,999,964 99.99 17 33,999,388

ALLEVARD SOGEFI U.S.A., Inc.Prichard (U.S.A.)

USD 20,055,000 191 100.00 20,055,000

SOGEFI FILTRATION d.o.o.Medvode (Slovenia)

Euro 10,291,798 100.00 10,291,798

SOGEFI PURCHASING S.A.S.Guyancourt (France)

Euro 100,000 10,000 100.00 10 100,000

SHANGHAI SOGEFI AUTO PARTS Co. LtdShanghai (China)

USD 13,000,000 100.00 13,000,000

SYSTEMES MOTEURS S.A.S. ***Guyancourt (France)

Euro 54,938,125 36,025 100.00 1,525 54,938,125

SOGEFI (SUZHOU) AUTO PARTS CO., LtdWujiang (China)

USD 15,000,000 100.00 15,000,000

*The company changed name to Sogefi Filtration France S.A. effective January 1, 2016 ** The company changed name to Sogefi Suspensions France S.A. effective January 1, 2016 *** The company changed name to Sogefi Air & Refroidissement S.A.S. effective January 1, 2016

Sogefi | 2015 Consolidated Financial Statements – Group Companies 337

Indirect equity investments

Currency Sharecapital

Number of shares

%held

Par valueper share


heldFILTRATIONBUSINESS UNIT

SOGEFI-MNR Engine Systems India Pvt LtdBangalore (India)45% held by Filtrauto S.A.24.98% held by Systèmes Moteurs S.A.S.0.02% held by Systèmes Moteurs China, S.à.r.l.

INR 21,254,640 1,487,825 70.00 10 14,878,250

SOGEFI FILTRATION DO BRASIL LtdaSão Bernardo do Campo (Brazil)99.9999981% held by Sogefi Filtration S.A.0.0000019% held by Allevard Molas do Brasil Ltda

BRL 51,507,374 51,507,374 100.00 1 51,507,374

SOGEFI FILTRATION ARGENTINA S.A.Buenos Aires (Argentina)94.248% held by Sogefi Filtration do BrasilLtda5.176% held by Filtrauto S.A.0.575% held by Sogefi Rejna S.p.A.

ARP 57,235,407 57,235,405 99.99 1 57,235,405




Number of shares

%held

Par valueper share


heldAIR&COOLING BUSINESS UNIT

SOGEFI ENGINE SYSTEMS CANADA CORP. Nova Scotia (Canada)Held by Systèmes Moteurs S.A.S.

CAD 39,393,000 2,283 100.00 39,393,000

SOGEFI ENGINE SYSTEMS USA, Inc. Wilmington (U.S.A.)Held by Systèmes Moteurs S.A.S.

USD 100 1,000 100.00 0.10 100

SYSTEMES MOTEURS CHINA, S.à.r.l.Luxembourg (Luxembourg)Held by Systèmes Moteurs S.A.S.

Euro 12,500 125 100.00 100 12,500

S.C. SYSTEMES MOTEURS S.r.l.Titesti (Romania)99.9997% held by Systèmes Moteurs S.A.S. 0.0003% held by Sogefi Filtration S.A. (Spain)

RON 7,087,610 708,761 100.00 10 7,087,610

SOGEFI ENGINE SYSTEMS MEXICO S. de R.L. de C.V.Apodaca (Mexico)0.03% held by Systèmes Moteurs S.A.S.99.97% held by Sogefi Engine Systems Canada Corp.

MXN 3,000 3,000 100.00 1 3,000

SOGEFI ENGINE SYSTEMS HONG KONG Ltd Hong Kong (Hong Kong)Held by Systèmes Moteurs China, S.à.r.l.

HKD 1,000 1,000 100.00 1 1,000

Sogefi | 2015 Consolidated Financial Statements – Group Companies 339



Number of shares

%held

Par valueper share


heldSUSPENSIONS BUSINESS UNIT

ALLEVARD SPRINGS LtdClydach (Great Britain)Held by Allevard Rejna Autosuspensions S.A.

GBP 4,000,002 4,000,002 100.00 1 4,000,002

ALLEVARD FEDERN GmbHVölklingen (Germany)Held by Allevard RejnaAutosuspensions S.A.

Euro 50,000 100.00 50,000

ALLEVARD REJNA ARGENTINA S.A.Buenos Aires (Argentina)Held by Allevard Rejna 89.97% held by Autosuspensions S.A.10% held by Allevard Molas do Brasil Ltda

ARP 16,000,000 16,595,020 99.97 1 16,595,020

IBERICA DE SUSPENSIONES S.L. (ISSA)Alsasua (Spain)Held by Allevard Rejna Autosuspensions S.A.

Euro 10,529,668 5,264,834 50.00 1 5,264,834

ALLEVARD MOLAS DO BRASIL

São Paulo (Brazil)Partecipazione di Allevard Rejna 99.997% held by Allevard Rejna Autosuspensions S.A. 0.003% held by Allevard Springs Ltd

BRL 37,161,683 37,161,683 100.00 1 37,161,683

UNITED SPRINGS LtdRochdale (Great Britain)Held by Allevard Rejna Autosuspensions S.A.

GBP 6,500,000 6,500,000 100.00 1 6,500,000

UNITED SPRINGS B.V.Hengelo (Netherlands)Held by Allevard Rejna Autosuspensions S.A.

Euro 254,979 254,979 100.00 1 254,979

SHANGHAI ALLEVARD SPRING Co., LtdShanghai (China)Held by Allevard Rejna Autosuspensions S.A.

Euro 5,335,308 60.58 3,231,919

UNITED SPRINGS S.A.S.Guyancourt (France)Held by Allevard Rejna Autosuspensions S.A.

Euro 10,218,000 2,043,600 100.00 5 10,218,000

S.ARA COMPOSITE S.A.S.Guyancourt (France)Held by Allevard Rejna Autosuspensions S.A.

Euro 10,000,000 19,000,000 95.00 0.5 9,500,000

ALLEVARD IAI SUSPENSIONS Pvt LtdPune (India)Held by Allevard Rejna Autosuspensions S.A.

INR 302,000,000 22,417,154 74.23 10 224,171,540

LUHN & PULVERMACHER -DITTMANN & NEUHAUS GmbHHagen (Germany)Held by Allevard Federn GmbH

Euro 50,000 100.00 50,000 50,000


EQUITY INVESTMENTS IN SUBSIDIARIES CONSOLIDATED USING THE EQUITY METHOD



Number of shares

%held

Par valueper share


heldMARK IV ASSET (Shanghai) AUTO PARTS Co., LtdShanghai (China)Held by Sogefi Engine Systems Hong Kong Limited

RMB 10,000,000 1 50.00 5,000,000

EQUITY INVESTMENTS IN OTHER COMPANIES CARRIED AT COST



Number of shares

%held

Par valueper share


heldUMC & MAKKAWI SPRING MANUFACTURING Co., LtdKhartoum (Sudan)Held by Sogefi Rejna S.p.A.

SDP 900,000 225 25.00 1,000 225,000

AFICO FILTERS S.A.E.Cairo (Egypt)Held by Sogefi Rejna S.p.A.

EGP 11,000,000 24,880 22.62 100 2,488,000

Sogefi | 2015 Consolidated Financial Statements – Certification art. 81-ter resolution 11971/99 341

CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT ART. 81-TER OF CONSOB RESOLUTION No. 11971 OF MAY 14, 1999

AND SUBSEQUENT MODIFICATIONS AND INTEGRATIONS 1. The undersigned:

Laurent Hebenstreit – Chief Executive Officer of Sogefi S.p.A. Yann Albrand – Manager responsible for preparing Sogefi S.p.A.’s financial reports hereby certify having also taken into consideration the provisions of Article 154-bis, paragraph 3 and 4, of Italian Legislative Decree n. 58 of February 24, 1998, that: are adequate with respect to the company structure and have been effectively applied the administrative and accounting procedures for the

preparation of the consolidated financial statements for the 2015 fiscal year. 2. No relevant aspects are to be reported on this subject. 3. It is also certified that: 3.1 the consolidated financial statements at December 31, 2015:

have been prepared in accordance with international accounting standards as endorsed by the European Union through Regulation (EC) 1606/2002 of the European Parliament and of the Council of July 19, 2002;

correspond to the books and accounting records;

provide a true and fair representation of the financial position, result of operations and cash

flow of the issuer and the companies included in the scope of consolidation.

3.2 The report on operations includes a reliable analysis of the performance and result of operations and also the position of the issuer and the companies included in the scope of consolidation together with all principle risks and uncertainties that the Group is exposed. Milan, February 29, 2016 Signed by Signed by Chief Executive Officer Manager responsible for preparing financial report

Laurent Hebenstreit Yann Albrand

342 Sogefi | Report of the Board of Statutory Auditors

SOGEFI S.p.A.

Company subject to policy guidance and coordination on the part of CIR S.p.A.

REPORT OF THE BOARD OF STATUTORY AUDITORS PURSUANT TO ARTICLE 153 OF ITALIAN LEGISLATIVE DECREE No. 58/1998

To the Shareholders’ Meeting of SOGEFI S.p.A. During the financial year closed at December 31, 2015, we carried out our supervisory activity as required by law and the Articles of Association, in accordance with the Rules of Conduct for the Board of Statutory Auditors recommended by the National Council of Accountants and the Corporate Governance Code issued by the Corporate Governance Committee of Borsa Italiana S.p.A., and hereby report on such activity. This report was drawn up following the recommendations set out in Consob Communication no. 1025564 of April 6, 2001 as amended. As regards the methods employed to perform our duties during the period under consideration, we report as follows: - we attended the Shareholders’ Meetings and Board of Directors meetings held during

the period under consideration and obtained timely and adequate information on operations and their outlook, as well as on significant operational, financial and equity-related operations conducted by the Company and subsidiaries within the Group, as required by law and the Articles of Association; all meetings of the Control and Risk Committee and of the Appointment and Remuneration Committee were attended by one or more members of the Board of Statutory Auditors;

- we obtained the necessary information to perform our tasks and determine compliance with the law and the Articles of Association, proper governance principles, adequacy of the Company’s organisational structure, internal control system and of the administration-accounting system, by direct investigation, collecting information from the heads of the involved departments and sharing data and significant information with the appointed Independent Auditors;

- under art. 19 of Legislative Decree no. 39/2010, our activities in our capacity as Internal Control and Audit Committee addressed the following issues: a) financial reporting process; b) effectiveness of internal control, auditing and risk management systems; c) statutory audits of annual and consolidated accounts; d) independence of the Independent Auditors, and were conducted by direct investigation, collecting information from the heads of the involved departments, analysing the results of the Independent Auditors' work;

- we examined the results of the quarterly audits of accounts to ensure proper accounting conducted by the Independent Auditors;

- we obtained the Reports provided for by art. 14 and art. 19, sub-paragraph 3 of Legislative Decree no. 39/2010 from the Independent Auditors;

- under art. 17, sub-paragraph 9, letter a) of Legislative Decree no. 39/2010, the Independent Auditors submitted their annual Statement of Independence, a disclosure of any additional, non-audit services provided to SOGEFI S.p.A. and the Group by the Independent Auditors or its affiliates for our examination;

Sogefi | Report of the Board of Statutory Auditors 343

- under art. 17, sub-paragraph 9, letter b) of Legislative Decree no. 39/2010, we analysed the risk associated with the independence of the Independent Auditors and the measures they take to reduce such risk;

- we monitored the performance of the system used to control subsidiaries and the adequacy of the directions given to them, also under art. 114, sub-paragraph 2 of Legislative Decree no. 58/1998;

- we monitored the actual methods used to implement the corporate governance rules set out in the Corporate Governance Code issued by Borsa Italiana S.p.A., as adopted by the Company;

- we determined whether the Organization, Management and Control Model as per Legislative Decree no. 231/2001 as amended was updated to comply with the expanded scope of the Decree;

- under art. 4, sub-paragraph 6 of the Regulation approved by Consob Resolution no. 17221 of March 12, 2010, we monitored compliance with the Discipline for related-party transactions approved by the Board of Directors;

- we ensured that no significant issues exist that the controlling bodies of SOGEFI S.p.A.'s subsidiaries would have to disclose;

- we determined compliance with law provisions and regulations concerning the preparation, layout and statements of the statutory and consolidated financial statements as well as their accompanying documents. We also determined that the relevant Reports on Operations comply with the law and regulations in force and are consistent with the resolutions of the Board of Directors;

- we ascertained the adequacy, in terms of method, of the impairment test process implemented to identify the presence of any impairment loss on assets entered to the financial statements subject to impairment test;

- we have determined that the Board of Directors properly implemented the verification criteria and procedures to assess the independence of its members, based on the statements made by the Directors and the opinions issued by the Board of Directors.

After completing our audit and monitoring activities as outlined above, we did not identify any significant events such as would have to be reported to the Supervisory Authorities, nor any proposals concerning the financial statements, their approval or any other issue within our area of responsibility.

* * *

Outlined below is the information specifically required by the above mentioned Consob Communication of April 6, 2001 as amended. - We collected adequate information on significant operational, financial and equity-related operations conducted by SOGEFI S.p.A. and its subsidiaries and established their compliance with the law and the Articles of Association; the Directors provide adequate disclosure on such transactions in the Report on Operations; we also obtained information on and assurance that the transactions resolved and carried out were not manifestly imprudent, risky, in conflict with resolutions or in potential conflict of interest with the same or, in any case, of such a nature as to jeopardise integrity of corporate assets.


- We obtained adequate information on intercompany and related party transactions. Based on obtained information, we determined that such transactions comply with the law and the Articles of Association, satisfy the interest of the company and raise no doubts as to their accurate, exhaustive disclosure in the financial statements, the existence of any conflict-of-interest situations, the protection of corporate assets and of non-controlling shareholders; periodic audits and inspections carried out at the Company's premises did not identify any atypical and/or unusual transactions. - The Directors provide adequate disclosures on key transactions, as well as on the dealings between SOGEFI S.p.A., Group companies and/or related parties in the Report on Operations and in the Notes, and state that such dealings were conducted at arm’s length, taking into account the quality and type of services rendered; such dealings mainly consisted in the provision of administrative and financial services, including the Group centralized treasury management, with the related credit and debit interest , as well as management support and the use of the information system of the Group “SAP”; moreover SOGEFI S.p.A. receives by its Parent Company CIR S.p.A. services for what concerns strategical, administrative, financial, fiscal and corporate development and participates in the tax filing system; appropriate financial details are provided and the impact on the statement of financial position is adequately described in the documents accompanying the 2015 statutory financial statements. - The Independent Auditors Deloitte & Touche S.p.A. issued their Audit Reports under art. 14 of Legislative Decree no. 39/2010 on the statutory and consolidated financial statements as at December 31, 2015 on the same date as this document. These reports include the auditors' opinion on consistency as provided for by art. 14, sub- paragraph 2, letter e) of Legislative Decree no. 39/2010 and art. 123 bis of Legislative Decree no. 58/1998, without any disclosure observations or statements. - We received no complaints pursuant to art. 2408 of the Italian Civil Code, nor do we have any knowledge of any statements of complaints submitted to other parties. - During the year 2015, SOGEFI S.p.A. engaged the Independent Auditors to perform certain certifications after due inspection - in addition to its auditing services - for a consideration of Euro 2,000. - During the same year, SOGEFI S.p.A.'s subsidiaries engaged the Independent Auditors to perform certain certifications after due inspection for a consideration of Euro 29,000. The amounts paid were found to be adequate consideration for the scope and complexity of the services rendered and are not deemed liable to affect the independence and discretion of the auditors in performing their auditing tasks. - During the year under consideration, we have given advice pursuant to article 2389 of the Italian Civil Code. - The following meetings were held during the year 2015: 7 Board of Directors meetings, 8 Control and Risk Committee meetings, 2 Appointment and Remuneration Committee meetings and 6 Statutory Board of Directors meetings. - There are no particular observations to be made concerning compliance with proper governance principles, which seem to have been implemented consistently, or the adequacy of the organisational structure, which we found to be adequate to meet the requirements for operations management and control. It is worth remembering that during the year the Company has concluded with success the research of a manager to appoint as Chief Executive Officer which has been nominated in date June, 5th. - We found the internal control system to be adequate to the size and management style of the Company, and were able to confirm this during the meetings of the Control and Risk Committee, which are attended by the Chairman of the Statutory Board of Auditors (or by a Statutory Auditor appointed by the Chairman) as provided for by

Sogefi | Report of the Board of Statutory Auditors 345

corporate governance rules. In addition, the Group's Chief Internal Auditing Officer and Internal Control Officer under the Corporate Governance Code issued by the Corporate Governance Committee for listed companies acted as a liaison and provided the necessary information on the methods adopted to perform his duties and the results of his audits, among other things by attending certain meetings of the Statutory Board of Auditors. With reference to some deficiencies revealed in the internal control system of the Brazilian subsidiary of the filtration business unit, which generates about 3% of the group turnover, highlighted in the report on key matters and communication under art. 150, c.3 of TFU, the Company has put in place remedies aimed at solving the identified issues, the outcomes of which will be subject to valuation by the Statutory Auditors. - There are no observations to be made as to the adequacy of the administrative/accounting system and its ability to provide a reliable view of operations; with regard to the disclosures in the statutory and consolidated financial statements as at December 31, 2015, the Managing Director and the Manager responsible for preparing the Company’s financial reports under art. 154-bis, sub-paragraph 5 of Legislative Decree 58/1998 and art. 81- ter of Consob Regulation no. 11971 of May 14, 1999 as subsequently amended have issued their relevant statements. - There are no observations to be made on the adequacy of information flows from subsidiaries to the Holding Company aimed at ensuring timely compliance with disclosure obligations under the law. - During the periodic exchange of data and information between the Board of Statutory Auditors and the Auditors, among other things under art. 150, sub-paragraph 3 of Legislative Decree no. 58/1998, no issues have come up that would need to be disclosed in this report. - The Company substantially followed the recommendations contained in the Corporate Governance Code issued by the Corporate Governance Committee for listed companies and described its corporate governance model in the relevant Report, which was prepared among other things under art. 123-bis of Legislative Decree no. 58/1998. Within the limits of our responsibility, we monitored the actual methods used to implement the corporate governance rules set out in the above mentioned Corporate Governance Code, as adopted by the Company, and ensured that the findings of the Board's periodic assessment of Statutory Auditors' compliance with the independence requirements according to the same criteria applicable to Independent Directors under the above mentioned Corporate Governance Code were included in the Corporate Governance Report of SOGEFI S.p.A. In compliance with Legislative Decree no. 231/2001, the Company adopted, implemented and maintained up-to-date an “Organisational Model” that governs its behaviour and business conduct and set up a Supervisory Body as provided for by the Decree. The Company also adopted a Code of Ethics. - Our auditing and monitoring activities took place during the year 2015 in the normal course of business and identified no omissions, reprehensible facts and/or anomalies worth noting. After completing our audit and monitoring activities, we have no proposals concerning the statutory financial statements as at December 31, 2015, their approval or any other issue within our area of responsibility pursuant to article 153, paragraph 2 of Legislative Decree 58/1998, nor any remarks on the proposed allocation of the profit for the year submitted by the Board of Directors for approval.


The Board of Directors wishes to thank you for your trust and reminds you that the Board of Directors’ mandate is due to expire and that for its renewal the Directors have already managed to call you for the appropriate resolutions. Milan, March 29, 2016 The Board of Statutory Auditors Riccardo Zingales (Chairman of the Board of Statutory Auditors) Giuseppe Leoni (Acting Auditor) Claudia Stefanoni (Acting Auditor)

Sogefi 2015 Consolidated Financial Statements – Report of the Independent Auditor 347

348 Sogefi 2015 Consolidated Financial Statements – Report of the Independent Auditor

2015 BILANCIO CONSOLIDATO E BILANCIO DI ESERCIZIO 2015 … · 2016. 4. 26. · 2015 bilancio...

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